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Coca-Cola

NYSE:KO
Snowflake Description

Established dividend payer with moderate growth potential.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
KO
NYSE
$195B
Market Cap
  1. Beverages
Company description

The Coca-Cola Company, a beverage company, manufactures and distributes various nonalcoholic beverages worldwide. More info.


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3 Month History
KO
Industry
5yr Volatility vs Market

Value

 Is Coca-Cola undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of Coca-Cola to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

How is this discounted cash flow calculated?

  • The current share price of Coca-Cola is above its future cash flow value.
Often investors are willing to pay a premium for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for Coca-Cola's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are Coca-Cola's earnings available for a low price, and how does this compare to other companies in the same industry?
  • Coca-Cola is overvalued based on earnings compared to the US Beverages industry average.
  • Coca-Cola is overvalued based on earnings compared to the US market.
Price based on expected Growth
Does Coca-Cola's expected growth come at a high price?
  • Coca-Cola is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on Coca-Cola's assets?
  • Coca-Cola is overvalued based on assets compared to the US Beverages industry average.
X
Value checks
We assess Coca-Cola's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the Beverages industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Beverages industry average (and greater than 0)? (1 check)
  5. Coca-Cola has a total score of 0/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (66.98%).

    Full details on the Value part of the Simply Wall St company analysis model.
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Discounted cash flow (2 Stage Free Cash Flow to Equity)

The calculations below outline how an intrinsic value for Coca-Cola is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.

See our documentation to learn about this calculation.

5 year cash flow forecast

Present value of next 5 years cash flows:
$31,246

Terminal Value

Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = $9,693 × (1 + 2.47%) ÷ (8.49% – 2.47%)

Terminal value based on the Perpetuity Method where growth (g) = 2.47%:
$164,881

Present value of terminal value:
$109,684

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
$140,930 = $31,246 + $109,684

Value = Total value / Shares Outstanding ($140,930 / 4,261)

Discount to Share Price

Value per share:
$33.08

Current discount (share price of $45.78): -38.41%



Estimate of Discount Rate

The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 8.49% = 2.47% + (0.8 * 7.53%)



Estimate of Bottom Up Beta

The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value ($195,053,349,726).

Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))

0.625 = 0.531 (1 + (1- 30%) (25.21%))

Levered Beta used in calculation = 0.8



Assumptions
  1. The risk free rate of 2.47% is from the 10 year government bond rate in USD.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (7.53%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is Coca-Cola expected to perform in the next 1 to 3 years based on estimates from 22 analysts?

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
18.6%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is Coca-Cola expected to grow at an attractive rate?
  • Coca-Cola's earnings growth is expected to exceed the low risk savings rate of 3.6%.
Growth vs Market Checks
  • Coca-Cola's earnings growth is expected to exceed the US market average.
  • Coca-Cola's revenues are expected to decrease over the next 1-3 years, this is below the US market average.
Annual Growth Rates Comparison
Analysts growth expectations
Super high growth metrics
High Growth Checks
  • Coca-Cola's earnings are expected to grow by 18.6% yearly, however this is not considered high growth (20% yearly).
  • Coca-Cola's revenue is expected to decrease over the next 1-3 years, this is not considered high growth.
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • Coca-Cola is expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be above 20%.

Improvement & Relative to industry
  • Performance (ROE) is expected to be above the current US Beverages industry average.
  • An improvement in Coca-Cola's performance (ROE) is expected over the next 3 years.
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Future performance checks
We assess Coca-Cola's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the US market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the US market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
Coca-Cola has a total score of 3/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

  How has Coca-Cola performed over the past 5 years?

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare Coca-Cola's growth in the last year to its industry (Beverages).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • Coca-Cola's year on year growth rate is negative over the past 5 years and the most recent earnings are below average.
  • Coca-Cola's 1 year earnings growth is negative, it can't be compared to the 5 year average.
  • Coca-Cola's 1 year earnings growth is negative, it can't be compared to the US Beverages industry average.
Earnings and Revenue History
Coca-Cola's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • Poor return on shareholders funds (ROE < 20%) last year.
  • Coca-Cola performed worse than the US Beverages industry average based on Return on Assets (ROA) last year.
  • Performance based on Return on Capital Employed (ROCE) has been diminishing over 3 years.
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Past performance checks
We assess Coca-Cola's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Beverages industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
Coca-Cola has a total score of 0/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is Coca-Cola's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up Coca-Cola's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • Coca-Cola is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • Coca-Cola's long term commitments exceed its cash and other short term assets.
Balance sheet
This treemap shows a more detailed breakdown of Coca-Cola's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • Low level of unsold assets.
  • Total debt is not covered by total short term assets, assets are 0.8x debt.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
  • Coca-Cola's level of debt (222% of total debt) compared to net worth is high (greater than 40%).
  • The level of debt compared to net worth has increased over the past 5 years (97.5% vs 222% today).
  • Total debt is not well covered by annual operating cash flow (16.3%, less than 20% of total debt).
  • Interest on debt is well covered by earnings (EBIT is 67.3x coverage).
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Financial health checks
We assess Coca-Cola's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by short term assets? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. Coca-Cola has a total score of 2/6, see the detailed checks below.


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is Coca-Cola's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
3.23%
Current annual income from Coca-Cola dividends. Estimated to be 3.43% next year.
If you bought $2,000 of Coca-Cola shares you are expected to receive $1 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Paying above low risk savings rate (2.25%).
  • Paying above markets top dividend payers (3.18%).
Upcoming dividend payment

Purchase Coca-Cola on or before the 'Buy Limit' to receive their next dividend payment.

Dividends are usually paid every 3 or 6 months, you can time your share purchase to take advantage of upcoming dividend payments.
Dividend payment calendar
Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
  • Dividends per share have been stable in the past 10 years.
  • Dividends per share have increased over the past 10 years.
Current Payout to shareholders
What portion of Coca-Cola's earnings are paid to the shareholders as a dividend.
  • Dividends paid are not well covered by net profit (0.7x coverage).
Future Payout to shareholders
  • Dividends after 3 years are expected to be covered by net profit (1.3x coverage).
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Income/ dividend checks
We assess Coca-Cola's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
  2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
  3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  5. How sustainable is the dividend, can Coca-Cola afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  6. Coca-Cola has a total score of 5/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of Coca-Cola's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
James Quincey, image provided by Google.
James Quincey
COMPENSATION $8,703,710
AGE 52
TENURE AS CEO 0.5 years
CEO Bio

Mr. James Robert B. Quincey has been Chief Executive Officer of The Coca-Cola Company since May 1, 2017. Mr. Quincey has been the President and served as its Chief Operating Officer of The Coca-Cola Company since August 13, 2015 until May 1, 2017. Mr. Quincey served as the Chief Operating Officer of The Coca-Cola Company since August 13, 2015 until May 1, 2017. Mr. Quincey served as the President of Europe Group at The Coca-Cola Company and Coca Cola International Corp. from January 1, 2013 to August 2015. He served as the President of the Northwest Europe and Nordics Business Unit at The Coca-Cola Company since January 1, 2013. He served as the President of Northwest Europe & Nordics Business Unit at The Coca-Cola Company until January 1, 2013. He served as the President of Mexico Division of Coca-Cola Co since December 2005 until 2008 and also served as its President of South Latin Division since December 2003. Mr. Quincey joined Coca-Cola Company in Atlanta in 1996 as Director of Learning Strategy of the Latin America Group until he moved to Mexico as deputy to the Division President in April 1999. He served as a Region Manager of Argentina & Uruguay since 2000 and then also served as a General Manager of the South Cone region (Argentina, Chile, Uruguay & Paraguay) since January 2003. Prior to joining Coca-Cola Company, he served for The Kalchas Group, as a Partner in strategy consulting. He has been a Director of The Coca-Cola Company since April 26, 2017. He served as a Director of Embotelladora Andina S.A., since April 2006. Mr. Quincey holds a Bachelor's degree in Electronic Engineering from the University of Liverpool and is an Electronic Engineer.

CEO Compensation
  • James's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.
  • James's compensation appears reasonable.
Management Team Tenure

Average tenure and age of the Coca-Cola management team in years:

3.5
Average Tenure
53.9
Average Age
  • The tenure for the Coca-Cola management team is about average.
Management Team

James Quincey

TITLE
President
COMPENSATION
$9M
AGE
52
TENURE
0.5 yrs

Kathy Waller

TITLE
Executive VP & CFO
COMPENSATION
$7M
AGE
59
TENURE
3.6 yrs

Irial Finan

TITLE
Executive Vice President
COMPENSATION
$7M
AGE
60
TENURE
13.1 yrs

Mark Randazza

TITLE
VP, Assistant Controller & Chief Accounting Officer
AGE
51

Ed Hays

TITLE
Senior VP & CTO
AGE
58
TENURE
2.7 yrs

Barry Simpson

TITLE
Senior VP & Chief Information Officer
AGE
57
TENURE
1.1 yrs

Tim Leveridge

TITLE
VP & Investor Relations Officer
AGE
47

Bernhard Goepelt

TITLE
Senior VP
AGE
54
TENURE
5.9 yrs

Bea Perez

TITLE
Senior VP and Chief Public Affairs
AGE
47
TENURE
0.5 yrs

Jennifer Mann

TITLE
Senior VP & Chief People Officer
TENURE
0.5 yrs
Board of Directors Tenure

Average tenure and age of the Coca-Cola board of directors in years:

14.1
Average Tenure
68.6
Average Age
  • The average tenure for the Coca-Cola board of directors is over 10 years, this suggests they are a seasoned and experienced board.
Board of Directors

Muhtar Kent

TITLE
Chairman of the Board
COMPENSATION
$18M
AGE
64
TENURE
8.6 yrs

James Quincey

TITLE
President
COMPENSATION
$9M
AGE
52
TENURE
0.6 yrs

Steve Chan

TITLE
Chairman of Coca-Cola China Limited
AGE
60
TENURE
17.3 yrs

Zahi Khouri

TITLE
Chairman of Palestinian National Beverage Company and CEO of Palestinian National Beverage Company

John Brock

TITLE
Chairman of Coca-Cola Enterprises Inc and Chief Executive Officer of Coca-Cola Enterprises Inc
AGE
68
TENURE
9.6 yrs

Ron Allen

TITLE
Independent Director
COMPENSATION
$259K
AGE
75
TENURE
26.8 yrs

Sam Nunn

TITLE
Independent Presiding Director
COMPENSATION
$303K
AGE
78
TENURE
3.6 yrs

Barry Diller

TITLE
Director
COMPENSATION
$272K
AGE
75
TENURE
15.8 yrs

Mel Lagomasino

TITLE
Director
COMPENSATION
$284K
AGE
68
TENURE
9.1 yrs

Herb Allen

TITLE
Director
COMPENSATION
$270K
AGE
77
TENURE
35.8 yrs
Recent Insider Trading
  • No 3 month insider trading information.
Who owns this company?
X
Management checks
We assess Coca-Cola's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. Coca-Cola has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

Company News

Company Info

Map
Description

The Coca-Cola Company, a beverage company, manufactures and distributes various nonalcoholic beverages worldwide. The company primarily offers sparkling beverages and still beverages. Its sparkling beverages include nonalcoholic ready-to-drink beverages with carbonation, such as carbonated energy drinks, and carbonated waters and flavored waters. The company’s still beverages comprise nonalcoholic beverages without carbonation, including noncarbonated waters, flavored and enhanced waters, noncarbonated energy drinks, juices and juice drinks, ready-to-drink teas and coffees, and sports drinks. It also provides flavoring ingredients, sweeteners, beverage ingredients, and fountain syrups, as well as powders for purified water products. The Coca-Cola Company sells its products primarily under the Coca-Cola, Diet Coke/Coca-Cola Light, Coca-Cola Zero, Fanta, Sprite, Minute Maid, Georgia, Powerade, Del Valle, Schweppes, Aquarius, Minute Maid Pulpy, Dasani, Simply, Glacéau Vitaminwater, Gold Peak, FUZE TEA, Glacéau Smartwater, Ice Dew, I LOHAS, and Ayataka brand names. The company offers its beverage products through a network of company-owned or controlled bottling and distribution operators, as well as through independent bottling partners, distributors, wholesalers, and retailers. The Coca-Cola Company has a strategic partnership with Delivery Hero Group to collaborate in the field of online food ordering and delivery services. The company was founded in 1886 and is headquartered in Atlanta, Georgia.

Details
Name: The Coca-Cola Company
Ticker: KO
Exchange: NYSE
Founded: 1886
Market Cap: $195,053,349,726
Shares outstanding: 4,260,667,316
Website: http://www.coca-colacompany.com
Address: The Coca-Cola Company
One Coca-Cola Plaza,
Atlanta,
Georgia, 30313,
United States
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
NYSE KO Common Stock New York Stock Exchange US USD 02. Jan 1968
DB CCC3 Common Stock Deutsche Boerse AG DE EUR 02. Jan 1968
XTRA CCC3 Common Stock XETRA Trading Platform DE EUR 02. Jan 1968
SWX KO Common Stock SIX Swiss Exchange CH CHF 02. Jan 1968
SWX KO Common Stock SIX Swiss Exchange CH USD 02. Jan 1968
WBAG KO Common Stock Wiener Boerse AG AT EUR 02. Jan 1968
SNSE KO Common Stock Santiago Stock Exchange CL USD 02. Jan 1968
BMV KO * Common Stock Bolsa Mexicana de Valores MX MXN 02. Jan 1968
BVL KO Common Stock Bolsa de Valores de Lima PE USD 02. Jan 1968
BOVESPA COCA34 BDR EACH REPR 1 COM USD0.25 Bolsa de Valores de Sao Paulo BR BRL 25. Jul 2011
BASE KO CEDEARS EACH 5 REP 1 COM USD0.25 Buenos Aires Stock Exchange AR ARS 17. Feb 2000
Number of employees
Current staff
Staff numbers
100,300
Coca-Cola employees.
Industry
Industry: Soft Drinks
Sector: Food, Beverage and Tobacco