The Coca-Cola Company (NYSE: KO)
Quality Value Investing Research Report | Updated Coverage | February 2024
Summary:
The Coca-Cola Company was added to the QVI Concentrated Real-Time Stock Picks in 2010 for its wide-moat legacy status, predictability, and reliable dividend.
Management continues to perform strongly in profit margins and returns on equity and invested capital. And the enterprise’s downside risks are below average despite undercovered long-term debt.
QVI’s present value analysis shows that while Coke’s shareholder yields underperform the Treasury benchmark, its yield-on-cost basis is nearing double-digits in our family portfolio.
Valuation multiples suggest a premium-priced stock. On the contrary, share price downside risks remain low.
Although Wall Street analysts and Seeking Alpha’s quants are now bullish on the stock, here’s why Quality Value Investing remains somewhat skeptical in this updated research report.
Access your Quality Value Investing (QVI) Glossary of Investing Terms and Metric Targets when referencing this research report. Unless noted, all data presented is sourced from Seeking Alpha Premium as of the market close on February 2, 2024, and intended for illustration only.
The 43 holdings in the QVI Real-Time Stock Picks portfolio have collectively achieved alpha for 15 years by focusing research and analysis on a company’s current wealth and its share price’s present value. In other words, just the facts without unreliable predictive analysis typical of the buy side or the business modeling overkill of the sell side Wall Street analysts.
In this updated QVI Research Report, we’ll look at the Concentrated Real-Time Stock Picks consumer staples sector holding The Coca-Cola Company to see if it continues to meet Quality Value Investing’s active portfolio inclusion criteria based on our checklist analysis of the business’s current wealth and its stock’s present value.
Coca-Cola: Company Current Wealth
To uncover the current wealth of the company, QVI defines the value proposition, measures returns on management, and assesses enterprise downside risks.
Value Proposition
QVI Research Report’s value proposition section provides a brief synopsis of the company’s business model, major-exchange listing, stock symbol, market capitalization, and dividend-paying status. In addition, it defines the competitive advantages of a company’s products or services to its customers compared to the industry, including the stock’s historical performance vs. the sector and market.
Coca-Cola KO 0.00%↑ is a dividend-paying large-cap stock in the consumer staples sector’s soft drinks and non-alcoholic beverages industry. KO was added to the QVI Concentrated Stock Picks on October 4, 2010, at a split and dividend-adjusted $19.56 a share.
The Coca-Cola Company, a beverage company, manufactures, markets, and sells various nonalcoholic beverages worldwide. The company provides sparkling soft drinks, sparkling flavors, water, sports, coffee, tea, juice, value-added dairy and plant-based beverages, and other beverages. It also offers beverage concentrates and syrups, as well as fountain syrups to fountain retailers, such as restaurants and convenience stores.
The company sells its products under the Coca-Cola, Diet Coke/Coca-Cola Light, Coca-Cola Zero Sugar, Diet Coke, Cherry Coke, Fanta Orange, Fanta Zero Orange, Fanta Zero Sugar, Fanta Apple, Sprite, Sprite Zero Sugar, Simply Orange, Simply Apple, Simply Grapefruit, Fresca, Schweppes, Thums Up, Aquarius, Ayataka, BODYARMOR, Ciel, Costa, Dasani, dogadan, FUZE TEA, Georgia, glacéau smartwater, glacéau vitaminwater, Gold Peak, Ice Dew, I LOHAS, Powerade, Topo Chico, AdeS, Del Valle, fairlife, innocent, Minute Maid, and Minute Maid Pulpy brands.
It operates through a network of independent bottling partners, distributors, wholesalers, and retailers, as well as through bottling and distribution operators.
The Coca-Cola Company was founded in 1886 and is headquartered in Atlanta, Georgia, USA.
QVI’s value proposition elevator pitch for Coca-Cola:
Coke is a legendary global powerhouse with a ubiquitous brand name that likely isn’t going anywhere except consumers’ refrigerators, pantries, and cupholders.
Due Diligence Resources
For a more in-depth analysis of the all-important value proposition, visit Coca-Cola’s investor relations webpage and its most recent Form 10-K Annual Report submitted to the US Securities and Exchange Commission or SEC.
Performance vs. Sector and Market
The chart below illustrates Coca-Cola’s performance against the Consumer Staples Select Sector SPDR® Fund ETF (NYSE: XLP) and the SPDR® S&P 500 ETF Trust (NYSE: SPY) since being added to the QVI Concentrated Real-Time Stock Picks on October 4, 2010.
KO has underperformed its sector and the broader market significantly during Quality Value Investing’s 13+ years of coverage.
QVI’s value proposition rating for Coca-Cola: Neutral.
Next, we’ll look at the company’s returns on management and enterprise downsize risks, the share price’s present value, and the investment thesis, each exclusive to Quality Value Investing’s premium (paying) subscribers.
Disclosure: At the time of this writing, I/we had a beneficial long position in the common shares of KO in our family portfolio. I wrote this report myself, and it expresses my own opinions. I am not receiving compensation for it other than from Substack paid subscriptions. I have no business relationship with any company whose stock is mentioned in this post.