Coca-Cola -- The Essentials

Now trading at a price of $55.9, Coca-Cola has moved 0.2% so far today.

Over the last year, Coca-Cola logged a 1.0% change, with its stock price reaching a high of $64.99 and a low of $54.02. Over the same period, the stock underperformed the S&P 500 index by -20.0%. As of April 2023, the company's 50-day average price was $59.95. 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 3.2% dividend yield over the last 12 months.

Wider Gross Margins Than the Industry Average of 53.55%:

2018-02-23 2019-02-21 2020-02-24 2021-02-25 2022-02-22 2023-02-21
Revenue (MM) $35,410 $34,300 $37,266 $33,014 $38,655 $43,004
Gross Margins 63.0% 62.0% 61.0% 59.0% 60.0% 57.0%
Operating Margins 21% 27% 27% 27% 27% 25%
Net Margins 4.0% 19.0% 24.0% 23.0% 25.0% 22.0%
Net Income (MM) $1,248 $6,434 $8,920 $7,747 $9,771 $9,542
Net Interest Expense (MM) -$164 -$261 -$383 -$1,067 -$1,321 -$433
Depreciation & Amort. (MM) -$1,260 -$1,086 -$1,365 -$1,536 -$1,452 -$1,260
Earnings Per Share $0.29 $1.5 $2.07 $1.79 $2.25 $2.19
EPS Growth n/a 417.24% 38.0% -13.53% 25.7% -2.67%
Diluted Shares (MM) 4,324 4,299 4,314 4,323 4,344 4,350
Free Cash Flow (MM) $8,501 $8,927 $11,547 $10,832 $13,884 $12,427
Capital Expenditures (MM) -$1,571 -$1,300 -$1,076 -$988 -$1,259 -$1,409
Net Current Assets (MM) -$32,374 -$33,524 -$44,872 -$46,772 -$46,949 -$44,346
Long Term Debt (MM) $31,182 $25,364 $27,516 $40,125 $38,116 $36,377
Net Debt / EBITDA 3.65 3.18 3.04 3.25 2.56 2.26

Coca-Cola has strong margins with a stable trend, exceptional EPS growth, and wider gross margins than its peer group. Furthermore, Coca-Cola has weak revenue growth and a flat capital expenditure trend, irregular cash flows, and just enough current assets to cover current liabilities. In addition, we note significant leverage.

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

Coca-Cola has a trailing twelve month P/E ratio of 24.9, compared to an average of 24.36 for the Consumer Staples sector. Based on its EPS guidance of $2.82, the company has a forward P/E ratio of 21.3. The company doesn't provide forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 42.3%. On this basis, Coca-Cola's PEG ratio is 0.59. Using instead the 11.1% weighted average of Coca-Cola's earnings CAGR and the broader market's anticipated 5-year EPS growth rate, the company's PEG ratio is 2.23, which suggests that its shares may be overpriced. Furthermore, Coca-Cola is likely overvalued compared to the book value of its equity, since its P/B ratio of 9.29 is higher than the sector average of 4.29. The company's shares are currently trading 226.9% above their Graham number.

Coca-Cola Has an Average Rating of Buy:

The 21 analysts following Coca-Cola have set target prices ranging from $63.0 to $76.0 per share, for an average of $69.67 with a buy rating. As of April 2023, the company is trading -14.0% 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 71.5% 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 $22,360,000,610.

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.