Take This Into Account Before Investing in KO

Coca-Cola Company logged a 0.4% change during today's afternoon session, and is now trading at a price of $64.05 per share. The S&P 500 index moved -0.6% and the Nasdaq posted a -1.5% change. KO's trading volume is 3,869,027 compared to the stock's average volume of 13,947,900.

Over the last 52 weeks, the stock moved 8.4%, with a high of $67.2 and a low of $54.02. During this time, the stock underperformed the S&P 500 index by 28.1%. The Coca-Cola Company, a beverage company, manufactures, markets, and sells various nonalcoholic beverages worldwide. The large-cap Consumer Defensive company has 79,000 full time employees and is based in Atlanta, GA. Coca-Cola Company has returned a 2.7% dividend yield over the last 12 months.

Snapshot of the Company's Consistent operating margins and A pattern of improving cash flows:

2018-12-31 2019-12-31 2020-12-31 2021-12-31
Revenue (MM) $31,856 $37,266 $33,014 $38,655
Revenue Growth n/a 17.0% -11.4% 17.1%
Gross Margins 63.05% 60.77% 59.31% 60.27%
Gross Margins Growth n/a -3.62% -2.4% 1.62%
Operating Margins 29.32% 27.56% 29.46% 28.56%
Operating Margins Growth n/a -6.0% 6.89% -3.05%
Earnings Per Share $1.5 $2.07 $1.79 $2.25
EPS Growth n/a 38.0% -13.53% 25.7%
Free Cash Flow (MM) $6,280 $8,417 $8,667 $11,258
FCF Growth n/a 34.03% 2.97% 29.9%
Capital Expenditures (MM) $-1,347 $-2,054 $-1,177 $-1,367
Net Debt / EBITDA 3.15 2.73 2.68 2.04

Basic Valuation Metrics Show Coca-Cola Company Is Overvalued:

Compared to the Consumer Defensive sector's average of 24.21, Coca-Cola Company has a trailing twelve month price to earnings (P/E) ratio of 28.1 and, based on its Eps guidance of 2.53, an expected P/E ratio of 25.3. The firm's price to earnings growth (PEG) is 4.88, which indicates that it is overvalued in terms of its expected rate of earnings growth. . Coca-Cola Company's price to book (P/B) ratio is 12.1 compared to its sector average of 4.09.

As of the date of publication, the company is trading 289.4% above its fair value as expressed by Benjamin Graham's formula. We calculate the Graham number as follows:

√(22.5 * TTM earnings per share * book value per share) = √(22.5 * 2.28 * 5.274) = $16.45

There is Mixed market sentiment About Coca-Cola Company:

24 analysts are following Coca-Cola Company and have set target prices ranging from $61 to $77 per share. On average, they have given the company a rating of buy. At today's prices, KO is trading -5.18% away from its average analyst target price of $67.55 per share, implying an analyst consensus of some upside potential for the stock. The company has a very low short interest since 0.7% of the company's shares are tied to short positions. Institutions own 71.4% of Coca-Cola Company's shares, while the insider ownership rate stands at 0.67%. The biggest shareholder is Berkshire Hathaway, Inc with a 9.25% stake in the company worth approximately $25,619,958,496.00.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.