Coca-Cola Co (KO) - Fundamental Analysis
Earnings and Revenue Growth
Earnings per Share (EPS) Growth: Coca-Cola witnessed a strong 34.09% growth in its EPS compared to the prior year's quarter. This signals enhanced profitability for the firm.
Revenue Growth: The company's revenues increased by 5.71% during the same period, suggesting a steady demand for its products or better market penetration.
Valuation Metrics
Price/Earnings Change (YOY): A decrease of 3.22% year-over-year suggests the stock might be becoming more reasonably valued or there are shifts in market sentiment.
Earnings Yield: At 4.03%, the earnings yield shows the percentage of earnings relative to the stock price, giving investors an idea of the potential return on investment.
EV/EBITDA: A ratio of 18.60 is on the higher side, possibly suggesting the market values Coca-Cola's stable cash flow and branding power.
Price/Book Ratio: A high P/B ratio of 9.95 indicates that the stock trades at a significant premium relative to its book value. This often reflects strong brand equity and investor trust.
Price/Free Cash Flow Ratio: The P/FCF ratio of 27.39 further underscores the premium valuation, emphasizing the importance of Coca-Cola's strong cash-generating ability.
Dividend Metrics
Dividend Yield: With a dividend yield of 3.01%, Coca-Cola remains an attractive choice for income-seeking investors.
Dividend Growth Rate: The company's dividend has been growing at 4.55% from the prior year and has an average growth rate of 2.90% over the past five years, reflecting its commitment to returning value to shareholders.
Dividend Payout Ratio: The payout ratio of 74.69% signifies that the company returns a large portion of its earnings to shareholders while retaining some for growth and expansion.
Profitability and Efficiency Metrics
Operating Margin: The impressive 31.03% operating margin indicates strong operational efficiency.
Return on Equity (ROE): With an ROE of 9.94% and a YoY growth of 1.98%, Coca-Cola has been effectively leveraging shareholder funds.
Return on Invested Capital (ROIC): The ROIC of 3.96% demonstrates efficient capital utilization, and the YoY growth of 0.94% suggests incremental improvements in capital deployment.
Financial Health Metrics
Total Debt/Equity Ratio Change: A reduction of 0.22 in the debt-to-equity ratio implies better financial health, indicating a decrease in debt or an increase in equity.
Momentum Indicators (Technical Analysis)
3-Month Momentum (Risk-Adjusted): A near-flat reading of -0.02 implies short-term stability with slight negative momentum.
12-Month Momentum (Risk-Adjusted): The figure of -0.15 indicates some caution among investors over the longer-term or possible sector-wide challenges.
Analyst Ratings
Consensus: Out of 25 analyst ratings, 14 recommend a strong buy, 5 advise to buy, and 6 are on hold. There are no sell or strong sell recommendations. The average consensus target price is $70.12, suggesting potential upside or alignment with the current valuation.
Conclusion
Coca-Cola's robust EPS growth, premium valuation metrics, and strong dividend profile position it as a staple in many portfolios. While the stock shows high valuation figures, its undeniable brand equity, vast distribution network, and product diversification justify the premium.
Earnings per Share (EPS) Growth: Coca-Cola witnessed a strong 34.09% growth in its EPS compared to the prior year's quarter. This signals enhanced profitability for the firm.
Revenue Growth: The company's revenues increased by 5.71% during the same period, suggesting a steady demand for its products or better market penetration.
Valuation Metrics
Price/Earnings Change (YOY): A decrease of 3.22% year-over-year suggests the stock might be becoming more reasonably valued or there are shifts in market sentiment.
Earnings Yield: At 4.03%, the earnings yield shows the percentage of earnings relative to the stock price, giving investors an idea of the potential return on investment.
EV/EBITDA: A ratio of 18.60 is on the higher side, possibly suggesting the market values Coca-Cola's stable cash flow and branding power.
Price/Book Ratio: A high P/B ratio of 9.95 indicates that the stock trades at a significant premium relative to its book value. This often reflects strong brand equity and investor trust.
Price/Free Cash Flow Ratio: The P/FCF ratio of 27.39 further underscores the premium valuation, emphasizing the importance of Coca-Cola's strong cash-generating ability.
Dividend Metrics
Dividend Yield: With a dividend yield of 3.01%, Coca-Cola remains an attractive choice for income-seeking investors.
Dividend Growth Rate: The company's dividend has been growing at 4.55% from the prior year and has an average growth rate of 2.90% over the past five years, reflecting its commitment to returning value to shareholders.
Dividend Payout Ratio: The payout ratio of 74.69% signifies that the company returns a large portion of its earnings to shareholders while retaining some for growth and expansion.
Profitability and Efficiency Metrics
Operating Margin: The impressive 31.03% operating margin indicates strong operational efficiency.
Return on Equity (ROE): With an ROE of 9.94% and a YoY growth of 1.98%, Coca-Cola has been effectively leveraging shareholder funds.
Return on Invested Capital (ROIC): The ROIC of 3.96% demonstrates efficient capital utilization, and the YoY growth of 0.94% suggests incremental improvements in capital deployment.
Financial Health Metrics
Total Debt/Equity Ratio Change: A reduction of 0.22 in the debt-to-equity ratio implies better financial health, indicating a decrease in debt or an increase in equity.
Momentum Indicators (Technical Analysis)
3-Month Momentum (Risk-Adjusted): A near-flat reading of -0.02 implies short-term stability with slight negative momentum.
12-Month Momentum (Risk-Adjusted): The figure of -0.15 indicates some caution among investors over the longer-term or possible sector-wide challenges.
Analyst Ratings
Consensus: Out of 25 analyst ratings, 14 recommend a strong buy, 5 advise to buy, and 6 are on hold. There are no sell or strong sell recommendations. The average consensus target price is $70.12, suggesting potential upside or alignment with the current valuation.
Conclusion
Coca-Cola's robust EPS growth, premium valuation metrics, and strong dividend profile position it as a staple in many portfolios. While the stock shows high valuation figures, its undeniable brand equity, vast distribution network, and product diversification justify the premium.
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