Take This Into Account Before Investing in KO

Now trading at a price of $61.11, Coca-Cola has moved -0.2% so far today.

Over the last year, Coca-Cola logged a -1.7% change, with its stock price reaching a high of $65.47 and a low of $54.02. Over the same period, the stock underperformed the S&P 500 index by -15.0%. As of April 2023, the company's 50-day average price was $62.28. The Coca-Cola Company, a beverage company, manufactures, markets, and sells various nonalcoholic beverages worldwide. Based in Atlanta, GA, the large-cap Consumer Staples company has 82,500 full time employees. Coca-Cola has offered a 2.9% dividend yield over the last 12 months.

Wider Gross Margins Than the Industry Average of 53.55%:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $37,266 $33,014 $38,655 $43,004
Gross Margins 60.8% 59.3% 60.3% 58.1%
Operating Margins 27.1% 27.2% 26.7% 25.4%
Net Margins 23.94% 23.47% 25.28% 22.19%
Net Income (MM) $8,920 $7,747 $9,771 $9,542
Net Interest Expense (MM) -383 -1,067 -1,321 -433
Net Interest Expense (MM) -$383 -$1,067 -$1,321 -$433
Depreciation & Amort. (MM) -$1,365 -$1,536 -$1,452 -$1,260
Earnings Per Share $2.07 $1.79 $2.25 $2.27
EPS Growth n/a -13.53% 25.7% 0.89%
Diluted Shares (MM) 4,314 4,323 4,340 4,325
Free Cash Flow (MM) $8,417 $8,667 $11,258 $9,534
Capital Expenditures (MM) -$2,054 -$1,177 -$1,367 -$1,484
Net Current Assets (MM) -$44,872 -$46,772 -$46,949 -$44,346
Current Ratio 0.76 1.32 1.13 1.15
Long Term Debt (MM) $27,516 $40,125 $38,116 $36,377
Net Debt / EBITDA 2.91 2.92 2.18 2.22

Coca-Cola has strong margins with a stable trend, a steady stream of strong cash flows, and growing revenues and decreasing reinvestment in the business. The company also benefits from wider gross margins than its peer group, positive EPS growth, and healthy leverage. Furthermore, Coca-Cola has just enough current assets to cover current liabilities.

Coca-Cola's Valuation Is in Line With Its Sector Averages:

Coca-Cola has a trailing twelve month P/E ratio of 27.4, compared to an average of 24.36 for the Consumer Staples sector. Based on its EPS guidance of $2.81, the company has a forward P/E ratio of 22.2. The 6.3% compound average growth rate of Coca-Cola's historical and projected earnings per share yields a PEG ratio of 4.35. This suggests that these shares are overvalued. Furthermore, Coca-Cola is likely overvalued compared to the book value of its equity, since its P/B ratio of 10.48 is higher than the sector average of 4.29. The company's shares are currently trading 269.0% above their Graham number. Ultimately, Coca-Cola's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued, its elevated P/B ratio notwithstanding.

Analysts Give Coca-Cola an Average Rating of Buy:

The 22 analysts following Coca-Cola have set target prices ranging from $63.0 to $75.0 per share, for an average of $69.88 with a buy rating. As of April 2023, the company is trading -10.9% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Coca-Cola has a very low short interest because 0.5% of the company's shares are sold short. Institutions own 72.1% of the company's shares, and the insider ownership rate stands at 0.67%, suggesting a small amount of insider investors. The largest shareholder is Berkshire Hathaway, Inc, whose 9% stake in the company is worth $24,444,000,244.

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.