Coca-Cola may be overvalued with mixed growth prospects, but the 24 analysts following the company give it an average rating of buy. The analysts have set target prices ranging from $60.0 to $77.0 per share, for an average of $68.51. At today's price of $60.9, Coca-Cola is trading -11.11% away from its average target price, suggesting there is an analyst consensus of some upside potential.
The Coca-Cola Company is an American multinational beverage corporation incorporated under Delaware's General Corporation Law and headquartered in Atlanta, Georgia. The large-cap Consumer Staples company is based in Atlanta, GA. Coca-Cola has offered a 3.07% dividend yield over the last 12 months.
Coca-Cola has a trailing twelve month P/E ratio of 27.43, compared to an average of 24.36 for the Consumer Staples sector. Based on its EPS guidance of 2.8, the company has a forward P/E ratio of 21.75. Based on the 97.0% average annual growth rate of Coca-Cola's historical and projected earnings per share, the company's PEG ratio is 0.28. This EPS growth rate is likely not sustainable, so will substitute the broader market's 5-year projected EPS growth rate of 13.05%, which gives us a PEG ratio of 2.1. This suggests that these shares are overvalued.
Furthermore, Coca-Cola is likely overvalued compared to its book value, since its P/B ratio of 12.13 is higher than the sector average of 4.29. The company's shares are currently trading 311.21% above their Graham number, implying that they are overvalued in terms of earnings and book value.
If analysts are giving the the company a decent rating despite its hefty price point, it could be related to its strong cash flows, decent dividend, and rock-solid business model. As a result, Coca-Cola has consistently wide margins as you can see in the financial summary below.
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $37,266 | $33,014 | $38,655 | $43,004 |
| Revenue Growth | n/a | -11.41% | 17.09% | 11.25% |
| Gross Margins | 60.77% | 59.31% | 60.27% | 58.14% |
| Gross Margins Growth | n/a | -2.4% | 1.62% | -3.53% |
| Operating Margins | 27.06% | 27.25% | 26.67% | 25.37% |
| Operating Margins Growth | n/a | 0.7% | -2.13% | -4.87% |
| Net Margins | 23.94% | 23.47% | 25.28% | 22.19% |
| Net Margins Growth | n/a | -1.96% | 7.71% | -12.22% |
| Earnings Per Share | $2.08 | $1.8 | $2.26 | $2.21 |
| EPS Growth | n/a | -13.46% | 25.56% | -2.21% |
| Diluted Shares (MM) | 4,285 | 4,301 | 4,321 | 4,325 |
| Free Cash Flow (MM) | $8,417 | $8,667 | $11,258 | $9,534 |
| FCF Growth | n/a | 2.97% | 29.9% | -15.31% |
| Capital Expenditures (MM) | $2,054 | $1,177 | $1,367 | $1,484 |
| Net Debt / EBITDA | 3.08 | 3.17 | 2.34 | 2.34 |
