The Coca-Cola Company Shares
The Coca-Cola Company is the largest beverage company in the world. It owns about 500 non-alcoholic beverage brands or 3,600 different product names. The product portfolio includes not only carbonated drinks but also plain water, juices and juice drinks, ready-to-drink tea and coffee, energy drinks, and sports drinks.
The company owns four out of the five globally recognized carbonated beverage brands: Coca-Cola, Diet Coke, Fanta, and Sprite. Trading with these brands began in 1886. Now they are sold in almost every country around the world – 200 countries.
The Coca-Cola Company belongs to the most prominent and largest company stock index, the Dow Jones Industrial Average (DJIA or Dow Jones 30), which it joined in March 1987. As known, the Dow Jones 30 index is a Blue Chip index.
The company and its main brand are arguably one of the oldest and most well-known in the world. Its iconic bottle celebrated its 100th anniversary. It is a market leader.
The recipe for Coca-Cola drink is the perfect marketing myth about its secret:
All obligations constitute up to 260% of the Equity. And it would take 3.8 years of Net profit in 2022 to cover Long-term debts. Finances are managed by taking risks, but the challenge is not insurmountable. Furthermore, the share of obligations is growing due to the Share buyback program.
The profit dynamics of the corporation have become unstable but rising. The average annual growth rate of EPS (earnings per share) over the past 10 years was only 1.06%. However, the average annual growth rate of EPS over the past 5 years was a staggering 50%. The average ROAE (return on average equity) over 10 years is 30.71%. This is a very good return in a highly competitive environment.
Translation: They invest within the framework of their competencies. The activities of all subsidiary and partner companies are related. The company implements a Share Buyback Policy approved in 2012. One US dollar invested in Long term asset (Capital expeditures) earns 3.89 USD EPS.
If the owners of the company wanted to sell shares and invest in the US 10-year bonds and receive the same return as the company provided in 2022, then the shares should be sold at $60 US dollars. This indicates that the stock price in the market is adequately assessed in terms of risk-free yield.
Coca-Cola Company Shares
The company’s activities and its results are easily predictable. However, the company generates such significant cash flows that it creates more value for the shareholders than it earns in a year. In 2022, the company spent 9,034,000,000 USD on dividends and share repurchases, while the earnings per share amounted to 9,526,500,000 USD.
The standard deviation of share prices is 8.67%, and with a beta of 0.55 (<1), you also receive a good diversification instrument for your stock portfolio, along with dividend-paying shares. The GRAPES method calculates a price perspective of up to 300 USD. This valuation is significantly higher than our method, but it would be a shame to sell such a stock…
We recommend HOLDING the shares and reinvesting the dividends. Reinvesting dividends increases the investment return. Since the idea was announced in April 2012, the investment has already yielded a pre-tax return of 112% or an average of 6.89% per year. Similar or slightly higher returns can be expected in the future.
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