SIM Portfolio Holdings: Consumer Staples
Student Investment Management: Company Presentation Spring 2015
Brendan Demuth, Erika Meschkat, and Charlene Zhang
Tuesday, April 21, 2015
Agenda
Sector
Companies
OVERVIEW
Appendix
T H E O H I O S TAT E U N I V E R S I T Y
• Overview
• Financial Analysis
• Economic Analysis
• Valuation Analysis
• Whole Foods
• Molson Coors
• Coca-Cola
• DCF Whole Foods
• DCF Molson Coors
• DCF Molson Coors Cont.
• Coca-Cola
• DCF Coca-Cola Cont.
2
Sector Overview
Sector Description
•
Products categories represented in this sector include
beverages (alcoholic and non), food, tobacco, personal and
household items.
•
Defensive and Low Beta: Protection in Economic Downturn
•
Some firms may see positive growth in economic downturns
(discount retailers, tobacco and alcohol)
•
Low correlation to S&P 500
Market Data1: $3.49 Trillion Market Cap
Key Operating Statistics
OVERVIEW
Largest Companies by Market Cap
•
Wal-Mart ($266.30B)
•
Proctor & Gamble ($225.65B)
•
Coca-Cola ($176.97B)
•
Pepsi Co ($139.54B)
•
Philip Morris International, Inc. ($120.49B)
•
CVS ($115.92B)
•
British American Tobacco ($102.24B)
(1)
• Comprised of 38 Companies
As of 3/17/2015 market close
T H E O H I O S TAT E U N I V E R S I T Y
3
Sector Financial Overview
Current Ratios: Major Companies
Earnings Growth
80.00%
Philip
Morris
Wal-Mart
Proctor &
Gamble
D/E Ratio
58.63
53.16
136.6
149.93
N/A
60.00%
A/R Turnover
72.19
12.85
9.85
12.75
7.58
40.00%
8.11
6.04
5.61
4.97
1.13
20.00%
2.38
0.59
0.51
0.83
0.81
ROA
8.01%
6.84%
7.8%
2.00%
20.43%
ROE
20.76%
14.15%
21.77%
7.29%
N/A
R&D (%
Sales)
N/A
N/A
N/A
N/A
N/A
Inventory
Turnover
Asset
Turnover
Coca-Cola Con-Agra
Current
Historical (2010)
Future (2016)
0.00%
-20.00%
OVERVIEW
T H E O H I O S TAT E U N I V E R S I T Y
4
Tobacco
Personal Products
Household Products
Food Products
Food & Staples Retailing
Beverages
Consumer Staples
-60.00%
S&P 500
-40.00%
Sector Economic Overview
USD Revaluation
Total Returns
Initial Jobless Claims
1 Month
3 Month
6 Month
USD/Euro
-3.87%
-10.55%
-14.52%
JPY/USD
0.76%
-0.57%
9.52%
USD/GBP
-4.25%
-4.45%
-8.97%
RUB/USD
-5.41%
9.57%
51.56%
OVERVIEW
Industry Pros: Economic Outlook
•
Better Job Prospects and improved Business Optimism
•
Rising Wages
•
Cheaper Fuel
•
Commodity Costs Stabilized: 5 Year Lows
(1)
As of 3/31/2015 market close
T H E O H I O S TAT E U N I V E R S I T Y
5
Sector Valuation Overview
Consumer Staples Valuation
S&P 500 Valuation
OVERVIEW
Industry Performance
(1)
As of 3/31/2015 market close
T H E O H I O S TAT E U N I V E R S I T Y
6
OVERVIEW
T H E O H I O S TAT E U N I V E R S I T Y
7
Overview of Whole Foods
One Year Stock Chart
Key Market Data
• 1Y stock price: 3/27/14-3/27/15
$60.00
• Current Price:$51.92
$55.00
$50.23
$50.00
• 52 Week H/L:$57.57/$36.08
$45.00
$40.00
• Market cap: $18.73B
$35.00
• Beta: .87
$30.00
$25.00
OVERVIEW
• 5Y Avg. Dividend Yield: 1.10%
T H E O H I O S TAT E U N I V E R S I T Y
8
$53.27
Opportunities & Risks
Risks
Opportunities
• Management structure changing
• Uncertainty around intermediate-term EBIT
• Value offerings
margin - may limit upside at current
• Technical innovations
valuations
• Expansion of channels
• Erosion of market share
OVERVIEW
• Marketing spend increase
T H E O H I O S TAT E U N I V E R S I T Y
• Rising costs of agricultural products
9
Industry Overview & Outlook
WFM Competitive Advantages
Fundamental Drivers
• Per-capita disposable income
• Customer WTP higher due to activities that
• The agricultural price index
promote experience
• Urban population growth
• Supply chain control and management of
• Healthy eating index
distribution networks to ensure quality
OVERVIEW
standards
U.S. Supermarket industry is highly competitive with notoriously
slim gross margins.
T H E O H I O S TAT E U N I V E R S I T Y
10
Market Share
Supermarket & Grocery Industry
• Whole Foods: 2.43%
• Kroger: 15.43%
• Safeway: 6.6%
Based on 2014 revenues of $14.2B out of $584.3B
Natural & Organic Segment
OVERVIEW
• Whole Foods: 23.9%
T H E O H I O S TAT E U N I V E R S I T Y
11
Business Performance Analysis
Management Effectiveness
Return on Assets: 10.08%
• Kroger: 5.84% ROA
• Fresh Market: 12.63% ROA
Return on Equity: 15.18%
• Kroger: 33.37%
• Fresh Market: 21.70%
40.00%
35.00%
30.00%
25.00%
Total Sales Growth
Consensus Sales Growth
20.00%
Gross Margin %
15.00%
Operating Margin %
10.00%
VALUE DRIVERS
5.00%
0.00%
2017E
T H E O H I O S TAT E U N I V E R S I T Y
2016E
2015E
2014
2013
2012
12
2011
2010
VALUATION ANALYSIS
Key Assumptions
• Discount Rate: 9.3%
• Terminal Growth Rate: 4%
• No debt/no interest expense last three years
Projected Growth
Year
Last Reported Year
1 YR Forward Est
2 YR Forward Est
3 YR Forward Est
14.19B
15.71B
17.51B
19.89B
% Growth from prior year
10%
11%
11%
14%
Shares Outstanding
360M
Revenues per share
0.025
0.022
0.019
0.017
EPS
1.57
1.72
1.92
2.2
% Growth from prior year
6%
10%
11%
15%
Appendix
Revenue
T H E O H I O S TAT E U N I V E R S I T Y
13
VALUATION ANALYSIS
Absolute Valuation (Stock)
Current
Target Multiple
Target/Current
Expected EPS
Target Price
P/E
34.29
31
0.90
1.72
$46.81
P/B
3.56
3.59
1.01
$52.22
P/S
1.39
1.5
1.08
$55.88
15
14.97
1.00
$51.68
P/EBITDA
INVESTMENT THESIS
Absolute Basis (S&P)
High
Low
Median
Current
P/E
25.0936
10.9608
16.2947
18.1999
P/B
2.9982
1.4558
2.4186
2.7851
P/S
1.8317
0.6838
1.4091
1.8023
P/EBITDA
9.5686
3.8438
7.0674
9.5323
P/E TTM
P/S TTM
P/B
P/CF TTM
EV/EBITDA
Avg
38.4
0.55
3.56
10.56
9.55
WFM
34.14
1.38
3.56
18.03
14.18
Kroger
20.64
0.32
3.41
8.65
9.32
Safeway
78.23
0.23
1.29
n/a
6.56
Sainsbury
149.11
0.21
1
6.45
4.65
Peers:
T H E O H I O S TAT E U N I V E R S I T Y
14
INVESTMENT THESIS
Performance & return
T H E O H I O S TAT E U N I V E R S I T Y
15
Recommendation
Current Price: $51.92
Target Price: $61.32
Upside potential: ~18.1%
INVESTMENT THESIS
BUY
T H E O H I O S TAT E U N I V E R S I T Y
16
OVERVIEW
• Company Analysis
T H E O H I O S TAT E U N I V E R S I T Y
17
Overview
One Year Stock Chart
Key Market Data
• Market Cap: 14.156B
• Beta: 1.36
• 52 week high: $78.21
• 52 week low: $57.08
• 12 month dividend yield: 2.02%
• Current Price: $76.96
OVERVIEW
• Target Price: $78.66
T H E O H I O S TAT E U N I V E R S I T Y
18
Business Segments
• The world’s fifth largest brewer by volume
• Business segments: Canada, US, Europe, Molson
Coors International
Canada Segment
37% market share
Molson Canadian,
Coors Light
United States Segment
Europe Segment
27% market share
Coors Light, Blue Moon,
Miller Light
20% market share
Carling, Coors Light, Staropramen
MCI
OVERVIEW
Growing and Expanding
Coors Light, Staropramen, Carling, Blue Moon,
Zima, Cobra, Coors Light
T H E O H I O S TAT E U N I V E R S I T Y
19
Company Strategy
Expanding International Market
Acquisitions and Partnerships
• Mature Markets: US, Canada, Europe
• Joint Venture: MillerCoors, Heinken
• Emerging Markets: Asia, Latin America
• Acquisition: StarBev (Europe), Mount
Shivalik Breweries (India)
Improve Efficiency and Reduce Cost
• Distribution System
INVESTMENT THESIS
• Raw Materials
T H E O H I O S TAT E U N I V E R S I T Y
20
Brewing Industry Overview
Industry Characteristics
• Entry barriers remain high
• The pressure form substitute products is considered to
increase in the near future
• Suppliers have quite low bargaining power
• Buyers have strong bargaining power on the industry
INVESTMENT THESIS
• Competition among sellers in the beer industry is fierce
T H E O H I O S TAT E U N I V E R S I T Y
21
Financial Analysis
Operating Income
893.20
867.40
864.50
805.70
754.00
726.50
VALUE DRIVERS
2014
2013
2012
2011
2010
2009
2014
2013
2012
2011
Gross Profit Margin
27.9%
27.7%
27.9%
28.4%
D/A
43.7%
44.6%
50.7%
38.1%
Current Ratio
67.9%
71.1%
67.3%
165.8%
T H E O H I O S TAT E U N I V E R S I T Y
22
Valuation Analysis
Key Assumptions
• Discount Rate: 9%
• Terminal Growth Rate: 4%
• CAPEX: 8% from 2018-2019, then lower
to 5%
OVERVIEW
Assumptions
Risk-free Rate
Market Premium
Beta
Cost of Equity
WACC
T H E O H I O S TAT E U N I V E R S I T Y
Known
Cost of Debt
Debt/Equity
Tax Rate
2.80%
5.75%
1.36
10.62%
9.07%
23
6.50%
0.40
0.35
Investment Risks
Market Risks
•
Economic Risks
Threats from inside and outside of the
industry
•
Operational Risks
Foreign Exchange & Oil Market
VALUE DRIVERS
•
Oversea branches profits and production
cost
T H E O H I O S TAT E U N I V E R S I T Y
Global economic growth is slowing down
•
24
Decline in revenue and increasing
operational costs
Valuation Analysis
VALUE DRIVERS
Sensitivity of Growth Rate to Discount Rate
$ 78.66
3.40%
3.60%
3.80%
4.00%
4.20%
4.40%
4.60%
8.40%
79.03
82.74
86.77
91.16
95.98
101.28
107.13
8.60%
75.50
78.91
82.60
86.62
91.01
95.82
101.11
8.80%
72.22
75.38
78.78
82.47
86.48
90.86
95.66
9.00%
69.19
72.11
75.26
78.66
82.34
86.35
90.72
9.20%
66.37
69.08
72.00
75.14
78.53
82.21
86.21
9.40%
63.74
66.27
68.97
71.88
75.02
78.41
82.08
9.60%
61.28
63.64
66.16
68.87
71.77
74.90
78.28
T H E O H I O S TAT E U N I V E R S I T Y
25
INVESTMENT THESIS
Recommendation
HOLD
T H E O H I O S TAT E U N I V E R S I T Y
26
OVERVIEW
(1)
Google Images Search; All rights reserved by the Coca-Cola Company
T H E O H I O S TAT E U N I V E R S I T Y
27
Company Overview
Business Description
Market Data1
The Coca-Cola Company is a beverage company. The Company
owns or licenses and markets more than 500 nonalcoholic
beverage brands, primarily sparkling beverages but also a variety of
still beverages, such as waters, enhanced waters, juices and juice
drinks, ready-to-drink teas and coffees, and energy and sports
drinks. The Company's segments include Eurasia and Africa,
Europe, Latin America, North America, Asia Pacific, Bottling
Investments and Corporate.
Current Price: $41.17 per share
Market Cap: $179.9B
Current FY Diluted EPS: $1.60
52 week range: $38.26 – $45.00
Key Operating Statistics
Sales2
OVERVIEW
(in millions)
(1) As of 4/07/2015 market close
(2) 2015E based on analyst consensus; see appendix for 10 year projections
T H E O H I O S TAT E U N I V E R S I T Y
2009
2010
2011
2012
2013
2014
2015E
Net Sales
$30,990 $35,119 $46,542 $48,017 $46,854 $45,998 $46,228
Growth
13.3% 32.5%
3.2%
-2.4%
-1.8%
0.5%
EBIT
8,231
8,449 10,173 10,779 10,228
9,708
9,477
Growth
2.6% 20.4%
6.0%
-5.1%
-5.1%
-2.4%
Margin
26.6% 24.1% 21.9% 22.4% 21.8% 21.1% 20.5%
Adj. EBITDA
9,467
9,892 12,127 12,761 12,205 12,114 11,788
Growth
4.5% 22.6%
5.2%
-4.4%
-0.7%
-2.7%
Margin
30.5% 28.2% 26.1% 26.6% 26.0% 26.3% 25.5%
28
Competitive Landscape
Industry and Competitors
•
•
OVERVIEW
•
Coca-Cola’s Competitive Advantage
Soda Tax bill reintroduced in Congress: $.01 USD tax per
teaspoon of caloric sweetener
Systematic headwinds from strengthening US Dollar and
macro-economic factors are driving up commodity prices
Primary competitors:
•
PepsiCo Inc.
•
Monster Beverage Corp.
•
Dr. Pepper Snapple Group Inc.
T H E O H I O S TAT E U N I V E R S I T Y
29
•
Strong International Brand Image
•
Premium Pricing Power
•
Superior historical record of returning cash to shareholders
via dividends and stock repurchases
Competitive Landscape cont.
Peer Group Position
Peer Group Summary
Ticker
52-Week Change
Market Cap (B)
Beta
Dividend Yield
P/E (TTM, GAAP)
Data as of
Fundamentals
Total Revenue (B,TTM)
Profit Margin
Earnings Growth
(5 Year, GAAP)
Revenue Growth (TTM)
Data as of
KO
PEP
6.13%
$177.7
0.5
3.24%
25.51x
Apr 2, 2015
15.67%
$141.8
0.4
2.74%
22.44x
Apr 2, 2015
MNST
94.77%
$23.1
0.4
0.00%
48.93x
Apr 2, 2015
$46.0
15.49%
$66.7
9.83%
$2.5
19.60%
$6.1
11.47%
1.72%
2.50%
20.25%
10.37%
-1.83%
Dec 31, 2014
0.40%
Dec 31, 2014
9.72%
Dec 31, 2014
2.07%
Dec 31, 2014
OVERVIEW
Source: TD Ameritrade
T H E O H I O S TAT E U N I V E R S I T Y
30
DPS
45.39%
$15.1
(0.1)
2.46%
21.94x
Apr 2, 2015
Headwinds & Risks
OVERVIEW
Macro Trend Toward Nonalcoholic Beverages…
…Decreasing Customer Demand
Forex
•
With the strengthening dollar,
roughly 60% of Coke’s
revenues are subject to
translation currency risks
United
States
•
Demand in the United States has
been falling as customers have
become more health conscious.
However, increased equity stake
in Monster.
Commodity
Prices
•
Coke is subject to price
fluctuations in a numerous
amount of its key ingredients,
such as high fructose corn
syrup, packaging materials,
plastics, and aluminum.
Emerging
Markets
•
Consumption has been flat or
falling in nearly all of Coke’s
emerging markets. Also, higher
taxes have pressured margins.
Soda Tax
•
A $.01 USD tax per teaspoon
of added caloric sweetener.
Increased
Equity
Stakes
•
Coke has increased its equity
stakes in both Monster and Green
Mountain Coffee Roasters to form
strategic alliances to help fend off
falling demand with economies of
scope.
T H E O H I O S TAT E U N I V E R S I T Y
31
DCF Cases for Coca-Cola
Bull Case – PT $42
Bear Case – PT $32
• Organic Sales growth & volume upside 5% revenue
which is in line with management
• CSD volume falls amid health & wellness concerns
Top Line Revenue -1.0%
• KO realizes productivity upside and cost savings from
refranchising
• Negative Forex pressure affect top line revenue 0.75%
• Pricing upside from strong brand name 0.50% upside
from base
• Increased Marketing costs not driving sales -0.25%
Operating Margin
• Gross Margins improve to 62%
• Soda & Income Taxes & Pricing Downside -0.50%
Revenue
• Operating Margins Improved from Monster Deal Forex
Stabilizes ~22%
• Top Line Revenue Growth 1%
• Competition Increases price wars resulting in Gross
Margin ~ 58%
Base Case – PT $36
• Organic growth stabilizes to analysts estimates of
2.5%
• Forex losses higher than expected, Global slowdown
EBIT~ 20%
• Productivity program fails to capture full upside of
savings potential
Current 10 Year Rate
Assumption of Market Return
Adjusted Beta
Forward 10 Year Rate
Terminal Discount Rate
Terminal FCF Growth
• FOREX pressures continue to mount & USD
continues to revalue
Appendix
• Gross Margins remain relatively unchanged ~ 60%
*As of Market Close 4/07/2015
• Monster Gains offset Forex Headwinds EBIT ~ 21%
T H E O H I O S TAT E U N I V E R S I T Y
32
=
=
=
=
=
=
1.89%
7.00%
0.83
2.89%
6.32%
2.50%
Investment Thesis
Rating & Forecasted Total Return
12-Month Rating
12-Month PT
Current Price
% Change +/Dividend
Dividend Yield
Total Forecast Return
EPS Analyst Estimates vs. Consensus
Diluted
Sell
$36.00
$41.17
-12.6%
$1.32
3.2%
-9.4%
Q1E
Q2E
Q3E
Q4E
FY15E
FY16E
FY17E
FY15E
Analyst
Consensus
$0.40
$0.42
$0.59
$0.60
$0.52
$0.52
$0.43
$0.42
$1.94
$1.96
$2.20
$2.11
$2.43
$2.29
% +/-4.8%
-0.8%
-0.7%
2.9%
-0.8%
4.2%
6.2%
Source: Company Financial Statements, Thompson Reuters, Analyst
Estimates
INVESTMENT THESIS
Key Metrics & Trading Data
52 Week Range
Market Cap. (B)
Diluted Shares Out. (mm)
Revenues (mm, ttm)
Diluted EPS (ttm)
Diluted EPS 15E
P/E (Diluted, ttm)
Forward P/E (Diluted)
T H E O H I O S TAT E U N I V E R S I T Y
One Year Chart
$45.00-38.26
$179.9
4,450.0
$45,998.0
$1.60
$1.94
25.7x
21.2x
33
Appendix
Appendix
T H E O H I O S TAT E U N I V E R S I T Y
34
Appendix
Whole Foods DCF model
T H E O H I O S TAT E U N I V E R S I T Y
35
DCF for Molson Coors
Year
2015E
2016E
2017E
2018E
2019E
2020E
2021E
2022E
2023E
2024E
2025E
Revenue
6,046
6,258
6,477
6,736
7,005
7,285
7,577
7,880
8,195
8,523
8,864
% Growth
Operating Income
Operating Margin
Interest
Interest % of Sales
Other Income (Expense)
Other Income % of Sales
Taxes
Tax Rate
Other Adjustment
Net Income
3.5%
979
% of Sales
Plus/(minus) Changes WC
% of Sales
Subtract Cap Ex
Capex % of sales
Free Cash Flow
Appendix
% Growth
T H E O H I O S TAT E U N I V E R S I T Y
1,050
4.0%
1,078
4.0%
1,121
4.0%
1,166
4.0%
1,212
4.0%
1,261
4.0%
1,311
4.0%
1,364
4.0%
1,418
16.2%
16.2%
16.2%
16.0%
16.0%
16.0%
16.0%
16.0%
16.0%
16.0%
16.0%
(181)
(188)
(194)
(202)
(210)
(219)
(227)
(236)
(246)
(256)
(266)
-3.0%
-3.0%
-3.0%
-3.0%
-3.0%
-3.0%
-3.0%
-3.0%
-3.0%
-3.0%
-3.0%
18
0.3%
6
0.1%
6
0.1%
20
21
22
23
24
25
26
27
0.3%
0.3%
0.3%
0.3%
0.3%
0.3%
0.3%
0.3%
(98)
(100)
(103)
(105)
(109)
(114)
(118)
(123)
(128)
(133)
(138)
-12.0%
-12.0%
-12.0%
-12.0%
-12.0%
-12.0%
-12.0%
-12.0%
-12.0%
-12.0%
-12.0%
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
715
% Growth
Add Depreciation/Amort
1,014
3.5%
729
2.1%
302
313
756
3.6%
324
788
819
4.2%
337
4.0%
350
852
4.0%
364
887
4.0%
379
922
4.0%
394
959
4.0%
410
998
4.0%
426
1,038
4.0%
443
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
(82)
14
14
13
14
15
15
16
16
17
18
-1.4%
0.2%
0.2%
0.2%
0.2%
0.2%
0.2%
0.2%
0.2%
0.2%
0.2%
(1,209)
(1,252)
(1,295)
(539)
(560)
(364)
(379)
(394)
(246)
(256)
(266)
-20.0%
-20.0%
-20.0%
-8.0%
-8.0%
-5.0%
-5.0%
-5.0%
-3.0%
-3.0%
-3.0%
(195)
(201)
599
623
867
902
938
-28.8%
3.1%
(274)
-397.8%
36
4.0%
39.1%
4.0%
4.0%
1,139
21.5%
1,185
4.0%
5.0%
1,233
4.0%
DCF Model for Molson Coors Cont.
NPV of Cash Flows
NPV of terminal value
Projected Equity Value
Free Cash Flow Yield
3,808
10,830
14,638
-1.94%
Current P/E
Projected P/E
Current EV/EBITDA
Projected EV/EBITDA
19.8
20.5
11.9
12.3
Shares Outstanding
Current Price
Implied equity value/share
Upside/(Downside) to DCF
Appendix
Debt
Cash
Cash/share
T H E O H I O S TAT E U N I V E R S I T Y
26%
74%
100%
Free Cash Yield
19.4
20.1
11.5
11.8
186.1
$
$
Terminal Value
76.16
78.66
3.3%
2,337
1,273
6.84
37
18.8
19.4
11.1
11.4
25,638
4.81%
Terminal P/E
24.7
Terminal EV/EBITDA
14.3
DCF for Coca-Cola: Base Case
Year Ended December 31,
Revenue
% Growth
2015E
$45,084
-2.03%
2016E
$47,338
5.00%
2017E
$49,232
4.00%
2018E
$50,463
2.50%
2019E
$51,724
2.50%
2020E
$53,017
2.50%
2021E
$54,343
2.50%
2022E
$55,701
2.50%
2023E
$57,094
2.50%
2024E
$58,521
2.50%
Gross Profit
Gross Margin
28,109
61.11%
27,490
60.97%
29,045
61.50%
30,524
62.00%
30,278
60.00%
31,034
60.00%
31,810
60.00%
32,606
60.00%
33,421
60.00%
34,256
60.00%
35,113
60.00%
Operating Income
Operating Margin
9,708
21.11%
10,146
22.51%
10,237
21.63%
10,339
21.00%
10,597
21.00%
10,862
21.00%
11,134
21.00%
11,412
21.00%
11,697
21.00%
11,990
21.00%
12,289
21.00%
111
0.24%
(4)
-0.01%
(11)
-0.02%
(123)
-0.25%
(101)
-0.20%
(103)
-0.20%
(106)
-0.20%
(82)
-0.15%
(84)
-0.15%
(86)
-0.15%
(88)
-0.15%
Other Income - net Gain (Loss)
% of Sales
(494)
-1.07%
1,618
3.59%
2,143
4.53%
2,228
4.53%
2,387
4.73%
2,560
4.95%
2,651
5.00%
2,771
5.10%
2,841
5.10%
2,912
5.10%
2,985
5.10%
Taxes
Tax Rate
2,201
23.60%
2,494
22.50%
2,783
22.50%
2,800
22.50%
2,963
23.00%
3,063
23.00%
3,180
23.25%
3,279
23.25%
3,361
23.25%
3,482
23.50%
3,569
23.50%
Net Income
% of Sales
% Growth
7,098
15.43%
8,520
18.90%
18.35%
9,514
20.10%
5.97%
9,644
19.59%
-2.60%
9,920
19.66%
0.35%
10,256
19.83%
0.85%
10,498
19.80%
-0.13%
10,823
19.92%
0.58%
11,094
19.92%
0.00%
11,334
19.85%
-0.33%
11,617
19.85%
0.00%
Add D&A
% of Sales
Plus (Minus) Changes in NWC
% of Sales
Subtract CAPEX
% of Sales
2,406
5.23%
241
0.52%
2,750
5.98%
2,311
5.13%
(136)
-0.30%
3,000
6.65%
2,381
5.03%
(97)
-0.21%
3,000
6.34%
2,450
4.98%
(246)
-0.50%
2,954
6.00%
2,511
4.98%
(252)
-0.50%
3,028
6.00%
2,574
4.98%
(259)
-0.50%
3,052
5.90%
2,638
4.98%
(265)
-0.50%
3,075
5.80%
2,704
4.98%
(272)
-0.50%
3,098
5.70%
2,772
4.98%
(279)
-0.50%
3,119
5.60%
2,841
4.98%
(285)
-0.50%
3,140
5.50%
2,912
4.98%
(293)
-0.50%
3,160
5.40%
Free Cash Flow
% Growth
6,995
7,696
10.02%
8,798
14.32%
8,894
1.09%
9,151
2.89%
9,519
4.02%
9,797
2.91%
10,158
3.69%
10,468
3.05%
10,750
2.69%
11,077
3.04%
Interest - net Gain (Loss)
Interest % of Sales
Appendix
2014
$45,998
T H E O H I O S TAT E U N I V E R S I T Y
38
DCF for Coca-Cola: Base Case Cont.
NPV of Cash Flows
NPV of Terminal Value
Projected Equity Value
Free Cash Flow Yield
Current P/E
Projected P/E
Current EV / EBITDA
Projected EV / EBITDA
Appendix
Shares Outstanding
65,466
95,083
160,549
3.82%
25.8
22.6
15.9
13.9
21.5
18.8
13.1
11.5
19.3
16.9
12.5
10.9
4,450
Current Price
Implied Equity Value/Share
Upside (Downside) to DCF
$41.17
$36.08
-12.37%
Debt
Cash
Cash / Share
19,063
18,010
$4.05
T H E O H I O S TAT E U N I V E R S I T Y
40.78%
59.22%
100.00%
39
Terminal Value:
175,408
Free Cash Yield
6.32%
Terminal P/E:
15.10
Terminal EV/EBITDA:
9.8