February 28, 2016
NYSE: KO
COCA-COLA CO
BUY
A+
A
A-
HOLD
B+
B
Annual Dividend Rate
$1.32
B-
C+
C
Annual Dividend Yield
2.98%
SELL
C-
D+
D
D-
Beta
0.49
KO BUSINESS DESCRIPTION
The Coca-Cola Company, a beverage company,
manufactures and distributes various nonalcoholic
beverages worldwide. The company primarily
offers sparkling beverages and still beverages.
STOCK PERFORMANCE (%)
3 Mo.
Price Change
1.84
E
E-
F
Market Capitalization
$192.1 Billion
Sector: Consumer Non-Discretionary
Weekly Price: (US$)
E+
Sub-Industry: Soft Drinks
SMA (50)
BUY
52-Week Range
$36.56-$44.18
RATING SINCE
TARGET PRICE
02/25/2009
$51.00
Price as of 2/25/2016
$44.16
Source: S&P
SMA (100)
1 Year
2 Years
52
TARGET
TARGET
TARGETPRICE
PRICE$51.00
$51.00
PRICE
$51.00
TARGET
50
48
46
1 Yr.
5.01
3 Yr (Ann)
5.39
12 Mo.
-3.71
3.56
5.03
3 Yr CAGR
-2.66
-6.59
-5.20
44
42
GROWTH (%)
Last Qtr
-8.03
60.64
64.70
Revenues
Net Income
EPS
38
Rating History
BUY
RETURN ON EQUITY (%)
KO
28.76
23.41
25.87
Q4 2015
Q4 2014
Q4 2013
40
Ind Avg
19.52
16.03
15.48
S&P 500
12.28
14.59
13.97
Volume in Millions
200
100
2014
2015
0
2016
COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History
P/E COMPARISON
RECOMMENDATION
We rate COCA-COLA CO (KO) a BUY. This is driven by several positive factors, which we believe should have
a greater impact than any weaknesses, and should give investors a better performance opportunity than most
stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price
performance, growth in earnings per share, increase in net income, notable return on equity and expanding
profit margins. We feel its strengths outweigh the fact that the company has had generally high debt
management risk by most measures that we evaluated.
26.44
26.37
21.53
KO
Ind Avg
S&P 500
HIGHLIGHTS
Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also
clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a
role, the company's strong earnings growth was key. Looking ahead, unless broad bear market conditions
prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past
year.
2013
2014
Q4 0.28
Q3 0.33
Q2 0.71
Q1 0.35
Q4 0.17
Q3 0.48
Q2 0.58
Q1 0.36
Q4 0.38
Q3 0.54
Q2 0.59
Q1 0.39
EPS ANALYSIS¹ ($)
2015
NA = not available NM = not meaningful
1 Compustat fiscal year convention is used for all fundamental
data items.
COCA-COLA CO reported significant earnings per share improvement in the most recent quarter compared to
the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth
over the past year. We feel that this trend should continue. During the past fiscal year, COCA-COLA CO
increased its bottom line by earning $1.67 versus $1.59 in the prior year. This year, the market expects an
improvement in earnings ($1.93 versus $1.67).
The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500
and the Beverages industry. The net income increased by 60.6% when compared to the same quarter one
year prior, rising from $770.00 million to $1,237.00 million.
Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of
strength within the company. When compared to other companies in the Beverages industry and the overall
market, COCA-COLA CO's return on equity exceeds that of the industry average and significantly exceeds that
of the S&P 500.
The gross profit margin for COCA-COLA CO is rather high; currently it is at 64.73%. It has increased from the
same quarter the previous year. Along with this, the net profit margin of 12.37% is above that of the industry
average.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 1
February 28, 2016
NYSE: KO
COCA-COLA CO
Sector: Consumer Non-Discretionary Soft Drinks Source: S&P
Annual Dividend Rate
$1.32
Annual Dividend Yield
2.98%
PEER GROUP ANALYSIS
40%
COT
V
FA
AB
OR
LE
FIZZ
R
VO
FA
LE
AB
-50%
Price as of 2/25/2016
$44.16
Faced with limited volume growth in developed markets, high-growth developing markets are increasingly
important to the bottom line. Mergers, acquisitions, and partnerships are on the rise as food and drink brands
look to establish or expand their presence in international markets. PepsiCo and Pepsi Bottling Group Inc.
acquired a 75% stake in Russia’s Lebedyansky JSC for around $2.0 billion in March 2008 and Coca-Cola bid
$2.3 billion for China Huiyuan Juice Group Ltd. in September 2008.
CCE
UN
Revenue Growth (TTM)
52-Week Range
$36.56-$44.18
The non-alcoholic beverage segment represents 60% of the market. Premium wineries revenue has
registered annual growth of 8% over recent years and energy drink volume continues to surge.
DPS
KO
AKO.B AKO.APEP
Market Capitalization
$192.1 Billion
INDUSTRY ANALYSIS
The US beverage industry is broadly divided into alcoholic and non-alcoholic segments. The alcoholic
segment includes beer, wine, and spirits. The non-alcoholic segment includes carbonated soft drinks (CSDs),
fruit beverages, bottled water, milk, sports drinks, energy drinks, ready-to-drink (RTD) tea, and RTD coffee.
The industry has around 4000 manufactures and distributors generating upwards of $140 billion in annual
revenue. The industry is highly competitive on pricing, packaging, marketing, and developing new products.
The two biggest players are Coca-Cola (KO) and PepsiCo (PEP), which together hold more than 50% of the
market.
REVENUE GROWTH AND EBITDA MARGIN*
COKE
Beta
0.49
KOF
6%
26%
EBITDA Margin (TTM)
Companies with higher EBITDA margins and
revenue growth rates are outperforming companies
with lower EBITDA margins and revenue growth
rates. Companies for this scatter plot have a market
capitalization between $1.3 Billion and $192.1 Billion.
Companies with NA or NM values do not appear.
*EBITDA – Earnings Before Interest, Taxes, Depreciation and
Amortization.
Health and convenience remain major challenges and play a significant role in shaping product strategies.
Beverages have been in the spotlight over the last five years because of research that links ingredients, such
as sugars and acids, with prevalent chronic diseases, such as obesity, diabetes, and dental decay. Rising
environmental concerns also present a challenge. The production, distribution, and sale of beverages in the
United States are subject to the Federal Food, Drug, and Cosmetic Act, the Dietary Supplement Health and
Education Act of 1994, and the Occupational Safety and Health Act. These acts, various environmental
statutes, and numerous other federal, state, and local statutes are applicable to the production,
transportation, sale, safety, advertisement, and ingredients. Industry fragmentation also poses a major threat.
To overcome this, companies are acquiring smaller players or developing independent plants. Coca-Cola’s
Monster distribution will help bottlers realize economies of scale in their direct store distribution system.
REVENUE GROWTH AND EARNINGS YIELD
40%
PEER GROUP: Beverages
COT
V
FA
AB
OR
COKE
LE
MNST
FIZZ
DPS
KO AKO.A
AKO.B
CCE
R
VO
FA
LE
AB
-50%
UN
Revenue Growth (TTM)
PEP
-1%
KOF
6%
Earnings Yield (TTM)
Ticker
KO
KOF
MNST
AKO.B
AKO.A
FIZZ
DPS
PEP
COT
COKE
CCE
Company Name
COCA-COLA CO
COCA-COLA FEMSA SAB DE CV
MONSTER BEVERAGE CORP
EMBOTELLADORA ANDINA SA
EMBOTELLADORA ANDINA SA
NATIONAL BEVERAGE CORP
DR PEPPER SNAPPLE GROUP INC
PEPSICO INC
COTT CORP QUE
COCA-COLA BTLNG CONS
COCA-COLA ENTERPRISES INC
Recent
Price ($)
44.16
73.84
133.11
17.69
15.33
38.32
93.21
100.67
12.47
176.69
50.10
Market
Cap ($M)
192,051
3,672
26,984
2,605
2,605
1,779
17,463
145,510
1,367
1,262
11,390
Price/
Earnings
26.44
30.77
47.54
26.01
22.54
33.32
23.48
27.43
NM
28.54
19.72
Net Sales
TTM ($M)
44,294.00
7,297.99
2,682.80
2,785.89
2,785.89
671.68
6,282.00
63,056.00
2,944.00
2,127.38
7,011.00
Net Income
TTM ($M)
7,351.00
497.39
546.73
107.24
107.24
53.42
764.00
5,452.00
14.50
57.70
596.00
The peer group comparison is based on Major Soft Drinks companies of comparable size.
Companies that exhibit both a high earnings yield
and high revenue growth are generally more
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between -41.7% and
40%. Companies with NA or NM values do not
appear.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 2
February 28, 2016
NYSE: KO
COCA-COLA CO
Sector: Consumer Non-Discretionary Soft Drinks Source: S&P
Annual Dividend Rate
$1.32
Annual Dividend Yield
2.98%
COMPANY 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. In
addition, the company licenses its technologies and
trademarks to suppliers and third parties. The Coca-Cola
Company sells its products primarily under 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, Glaceau Vitaminwater, Bonaqua/Bonaqa,
Ayataka, Gold Peak, I LOHAS, and FUZE TEA 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 was founded in
1886 and is headquartered in Atlanta, Georgia.
COCA-COLA CO
One Coca-Cola Plaza
Atlanta, GA 30313
USA
Phone: 404-676-2121
http://www.cocacola.com
Beta
0.49
Market Capitalization
$192.1 Billion
52-Week Range
$36.56-$44.18
Price as of 2/25/2016
$44.16
STOCK-AT-A-GLANCE
Below is a summary of the major fundamental and technical factors we consider when determining our
overall recommendation of KO shares. It is provided in order to give you a deeper understanding of our rating
methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
understanding of our stance on the stock, these factors must be assessed in combination with the stock’s
valuation. Please refer to our Valuation section on page 5 for further information.
FACTOR
SCORE
2.0
Growth
out of 5 stars
weak
Measures the growth of both the company's income statement and
cash flow. On this factor, KO has a growth score better than 30% of the
stocks we rate.
strong
5.0
Total Return
out of 5 stars
weak
Measures the historical price movement of the stock. The stock
performance of this company has beaten 90% of the companies we
cover.
strong
5.0
Efficiency
out of 5 stars
weak
Measures the strength and historic growth of a company's return on
invested capital. The company has generated more income per dollar of
capital than 90% of the companies we review.
strong
5.0
Price volatility
out of 5 stars
weak
Measures the volatility of the company's stock price historically. The
stock is less volatile than 90% of the stocks we monitor.
strong
4.5
Solvency
out of 5 stars
weak
Measures the solvency of the company based on several ratios. The
company is more solvent than 80% of the companies we analyze.
strong
4.0
Income
out of 5 stars
weak
Measures dividend yield and payouts to shareholders. The company's
dividend is higher than 70% of the companies we track.
strong
THESTREET RATINGS RESEARCH METHODOLOGY
TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
perform against a general benchmark of the equities market and interest rates. While our model is
quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.
Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 3
February 28, 2016
NYSE: KO
COCA-COLA CO
Sector: Consumer Non-Discretionary Soft Drinks Source: S&P
Annual Dividend Rate
$1.32
Annual Dividend Yield
2.98%
Consensus EPS Estimates² ($)
IBES consensus estimates are provided by Thomson Financial
0.44
1.93 E
2.03 E
Q1 FY16
2016(E)
2017(E)
Beta
0.49
Market Capitalization
$192.1 Billion
52-Week Range
$36.56-$44.18
Price as of 2/25/2016
$44.16
FINANCIAL ANALYSIS
COCA-COLA CO's gross profit margin for the fourth quarter of its fiscal year 2015 is essentially unchanged
when compared to the same period a year ago. Even though sales decreased, the net income has increased,
representing an increase to the bottom line. COCA-COLA CO has weak liquidity. Currently, the Quick Ratio is
0.89 which shows a lack of ability to cover short-term cash needs. The company's liquidity has increased
from the same period last year.
During the same period, stockholders' equity ("net worth") has decreased by 15.71% from the same quarter
last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial
difficulties could develop in the future.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
next 12-months. To learn more visit www.TheStreetRatings.com.
INCOME STATEMENT
Net Sales ($mil)
EBITDA ($mil)
EBIT ($mil)
Net Income ($mil)
Q4 FY15
10,000.00
2,501.00
1,974.00
1,237.00
Q4 FY14
10,872.00
2,368.00
1,869.00
770.00
Q4 FY15
19,900.00
90,093.00
44,213.00
25,554.00
Q4 FY14
21,675.00
92,023.00
41,745.00
30,320.00
Q4 FY15
64.73%
25.01%
19.74%
0.49
8.15%
28.76%
Q4 FY14
64.51%
21.78%
17.19%
0.50
7.71%
23.41%
Q4 FY15
1.24
0.63
143.00
13.80
Q4 FY14
1.02
0.58
139.00
13.45
Q4 FY15
4,324
0.33
0.28
5.91
NA
14,714,540
Q4 FY14
4,366
0.31
0.17
6.94
NA
15,249,278
BALANCE SHEET
Cash & Equiv. ($mil)
Total Assets ($mil)
Total Debt ($mil)
Equity ($mil)
PROFITABILITY
Gross Profit Margin
EBITDA Margin
Operating Margin
Sales Turnover
Return on Assets
Return on Equity
DEBT
Current Ratio
Debt/Capital
Interest Expense
Interest Coverage
SHARE DATA
Shares outstanding (mil)
Div / share
EPS
Book value / share
Institutional Own %
Avg Daily Volume
2 Sum of quarterly figures may not match annual estimates due to
use of median consensus estimates.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 4
February 28, 2016
NYSE: KO
COCA-COLA CO
Sector: Consumer Non-Discretionary Soft Drinks Source: S&P
Annual Dividend Rate
$1.32
Annual Dividend Yield
2.98%
RATINGS HISTORY
Our rating for COCA-COLA CO has not changed
since 10/25/2005. As of 2/25/2016, the stock was
trading at a price of $44.16 which is .1% below its
52-week high of $44.18 and 20.8% above its 52-week
low of $36.56.
2 Year Chart
Beta
0.49
Market Capitalization
$192.1 Billion
BUY: $37.77
Price/Earnings
1
2
3
premium
$40
2014
4
5
KO 26.44
Peers 26.37
• Average. An average P/E ratio can signify an
industry neutral price for a stock and an average
growth expectation.
• KO is trading at a valuation on par with its peers.
Price/Projected Earnings
From
Buy
To
Buy
RATINGS DEFINITIONS &
DISTRIBUTION OF THESTREET RATINGS
3
32.19% Buy - We believe that this stock has the
opportunity to appreciate and produce a total return of
more than 10% over the next 12 months.
35.29% Hold - We do not believe this stock offers
conclusive evidence to warrant the purchase or sale of
shares at this time and that its likelihood of positive total
return is roughly in balance with the risk of loss.
32.52% Sell - We believe that this stock is likely to
decline by more than 10% over the next 12 months, with
the risk involved too great to compensate for any
possible returns.
4
5
Price/Book
1
2
3
premium
4
5
Price/Sales
1
2
premium
3
4
5
Price to Earnings/Growth
4
5
discount
1
2
3
premium
4
5
discount
KO 1.70
Peers 1.67
• Average. The PEG ratio is the stock’s P/E divided by
the consensus estimate of long-term earnings
growth. Faster growth can justify higher price
multiples.
• KO trades at a valuation on par to its peers.
Earnings Growth
1
2
3
4
lower
5
higher
KO 5.03
Peers -3.10
• Higher. Elevated earnings growth rates can lead to
capital appreciation and justify higher
price-to-earnings ratios.
• KO is expected to have an earnings growth rate
that significantly exceeds its peers.
Sales Growth
discount
KO 4.31
Peers 4.15
• Average. In the absence of P/E and P/B multiples,
the price-to-sales ratio can display the value
investors are placing on each dollar of sales.
• KO is trading at a valuation on par with its industry
on this measurement.
3
KO 18.14
Peers 18.03
• Average. The P/CF ratio, a stock’s price divided by
the company's cash flow from operations, is useful
for comparing companies with different capital
requirements or financing structures.
• KO is trading at a valuation on par to its peers.
discount
KO 7.47
Peers 7.81
• Average. A lower price-to-book ratio makes a stock
more attractive to investors seeking stocks with
lower market values per dollar of equity on the
balance sheet.
• KO is trading at a valuation on par with its peers.
2
premium
discount
KO 21.75
Peers 23.25
• Average. An average price-to-projected earnings
ratio can signify an industry neutral stock price and
average future growth expectations.
• KO is trading at a valuation on par with its peers.
(as of 2/25/2016)
Research Contact: 212-321-5381
Sales Contact: 866-321-8726
2
premium
Price reflects the closing price as of the date listed, if available
TheStreet Ratings
14 Wall Street, 15th Floor
New York, NY 10005
www.thestreet.com
1
1
Price/CashFlow
discount
2015
MOST RECENT RATINGS CHANGES
Date
Price
Action
2/25/14
$37.77 No Change
Price as of 2/25/2016
$44.16
VALUATION
BUY. COCA-COLA CO's P/E ratio indicates a premium compared to an average of 26.37 for the Beverages
industry and a premium compared to the S&P 500 average of 21.53. For additional comparison, its
price-to-book ratio of 7.47 indicates a significant premium versus the S&P 500 average of 2.56 and a discount
versus the industry average of 7.81. The current price-to-sales ratio is well above the S&P 500 average and
above the industry average, indicating a premium. The valuation analysis reveals that, COCA-COLA CO seems
to be trading at a premium to investment alternatives within the industry.
$45
$43
52-Week Range
$36.56-$44.18
1
2
3
lower
4
5
higher
KO -3.71
Peers -4.21
• Lower. A sales growth rate that trails the industry
implies that a company is losing market share.
• KO significantly trails its peers on the basis of sales
growth
DISCLAIMER:
The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but
TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided
via the COMPUSTAT® Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as
other third-party data providers.
TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided
for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or
other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a
qualified securities professional, before you make any investment. None of the information contained in this report constitutes,
or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a
determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of
the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the
investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at
http://www.thestreet.com/static/about/terms-of-use.html.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 5