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Category: Stock Market and Coca-Cola
Date: 19 October 2019 Stock Price: $54.78 We take a look at the 3rd quarter earnings report of their 2019 fiscal year of The Coca-Cola Company the world's best known beverage maker, that owns brands such as Coca-Cola, Fanta, Minute Maid, Powerade and Costa Coffee.
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About Coca-Cola
The Coca-Cola Company (NYSE: KO) is a total beverage company, offering over 500 brands in more than 200 countries and territories. In addition to the company’s Coca-Cola brands, our portfolio includes some of the world’s most valuable beverage brands, such as AdeS soy-based beverages, Ayataka green tea, Dasani waters, Del Valle juices and nectars, Fanta, Georgia coffee, Gold Peak teas and coffees, Honest Tea, innocent smoothies and juices, Minute Maid juices, Powerade sports drinks, Simply juices, smartwater, Sprite, vitaminwater and ZICO coconut water. We’re constantly transforming our portfolio, from reducing sugar in our drinks to bringing innovative new products to market. We’re also working to reduce our environmental impact by replenishing water and promoting recycling. With our bottling partners, we employ more than 700,000 people, helping bring economic opportunity to local communities worldwide.
Overview of Coca-Cola's latest earnings report
Data below refers to the 3rd quarter data unless specified otherwise:
- Revenues: $9.507 billion (up from $8.775 billion for the same period of the previous year)
- Revenues increased by 8% over the last 12 months
- Cost of goods sold: $3.767 billion (up from $3.346 billion for the same period of the previous year)
- Cost of goods sold increased by 13% over the last 12 months
- Net earnings: $2.593 billion (up from $1.880 billion for the same period of the previous year)
- Diluted earnings per share: $0.61 (up from $0.44 for the same period of the previous year)
- PE ratio: 22.41
- Diluted weighted-average shares outstanding: 4.321 billion (up from 4.295 billion for the same period of the previous year)
- Cash and cash equivalents: $7.531 billion
- Cash and cash equivalents per share: $1.74
- Cash and cash equivalents makes up 3.18% of Coca-Cola's market capital
- Cash and cash equivalents makes up 8.61% of Coca-Cola's total assets
- Accounts receivable: $4.353 billion
- Accounts receivable makes up 4.97% of Coca-Cola's total assets
- Inventories: $3.266 billion
- Inventories makes up 3.73% of Coca-Cola's total assets
- Goodwill: $16.465 billion
- Essentially the goodwill shows the value of Coca-Cola's brand names.
- Goodwill pe share: $3.81
- We therefore estimate that 6.9% of Coca-Cola's stock price is made up by the value of their brand's
- Goodwill makes 18.83% of of Coca-Cola's total assets
- Stockholders equity in Coca-Cola: $20.683 billion
- Stockholders equity per share: $4.78
- So Coca-Cola is trading a 11.46 times its stockholders equity which is outside the expected range of between 2 and 4 which most firms ten to trade at.
- Cash generated from operations (for the 9 months): $7.771 billion
- Cash generated from operations per share (for the 9 months): $1.79
Coca Cola's management commentary on the results
ATLANTA, Oct. 18, 2019 – The Coca-Cola Company continued to execute on its key strategies in the third quarter, with strong revenue growth and value share gains globally. Reported net revenues grew 8% and organic revenues (non-GAAP) grew 5%, driven by innovation, revenue growth management and improving execution. The company’s performance year-to-date has led to an update in full year guidance. "Our performance gives us confidence that our strategies are taking hold with our consumers, customers and system," said James Quincey, chairman and CEO of The Coca-Cola Company. "We are positioning the company to create a better shared future for all of our stakeholders by delivering on our vision and growing sustainably."
Full Year 2019 Revenues:
Full Year 2019 Operating Income:
Full Year 2019 EPS:
Full Year 2019 Other Items:
Fourth Quarter 2019 Considerations – New:
Full Year 2020 Considerations – New:
Full Year 2019 Revenues:
- At least 5% growth in organic revenues (non-GAAP) – Updated
- At least 12% growth in comparable currency neutral net revenues (non-GAAP), including a 7% tailwind from acquisitions, divestitures and structural items – Updated
- Comparable net revenues (non-GAAP): 4% to 5% currency headwind based on the current rates and including the impact of hedged positions – Updated
Full Year 2019 Operating Income:
- 12% to 13% growth in comparable currency neutral operating income (non-GAAP), including a low single-digit tailwind from acquisitions, divestitures and structural items – Updated
- Comparable operating income (non-GAAP): 8% to 9% currency headwind based on the current rates and including the impact of hedged positions – Updated
Full Year 2019 EPS:
- -1% to 1% growth versus $2.08 in 2018 in comparable EPS (non-GAAP) – No Change
Full Year 2019 Other Items:
- Underlying effective tax rate (non-GAAP): Estimated to be 19.5% – No Change
- Cash from operations: At least $8.8 billion – Updated • Capital expenditures: Approximately $2.2 billion – Updated
- Net share repurchases (non-GAAP): Expect share repurchases to offset dilution from employee stock-based compensation plans – No Change
Fourth Quarter 2019 Considerations – New:
- Comparable net revenues (non-GAAP): 12% tailwind from acquisitions, divestitures and structural items; 3% currency headwind based on the current rates and including the impact of hedged positions
- Comparable operating income (non-GAAP): 7% currency headwind based on the current rates and including the impact of hedged positions
Full Year 2020 Considerations – New:
- Comparable net revenues (non-GAAP): 1% to 2% currency headwind based on the current rates and including the impact of hedged positions
- Comparable operating income (non-GAAP): 2% to 3% currency headwind based on the current rates and including the impact of hedged positions
Coca-Cola (NYSE: KO) stock price history
The image below, obtained from Google, shows the stock price history of Coca-Cola over the last 5 years. And it's been a fairly average time for Coca-Cola stockholders. 5 years ago the stock was trading at around $41.00 a stock and its currently trading at $54.78 a stock. That's very modest return of 33.6% provided to Coca-Cola stockholders over the last 5 years. The opportunity cost of holding Coca-Cola which only returned 33.6% over the last 5 compared to a stock like Netflix that returned over 300% for the same time period becomes very significant.
The stock of Coca-Cola is trading at a lot closer to its 52 week high of $55.92 than it is to its 52 week low of $44.25, which to us is a clear indication that the short term sentiment and momentum towards Coca-Cola's stock is very positive.
The stock of Coca-Cola is trading at a lot closer to its 52 week high of $55.92 than it is to its 52 week low of $44.25, which to us is a clear indication that the short term sentiment and momentum towards Coca-Cola's stock is very positive.
Coca-Cola (NYSE: KO) stock price history over the last 5 years
Recent coverage of Coca-Cola
The extract below covers the latest news regarding Coca-Cola sampling new bottles using marine plastics that has been recycled as obtained from TheStreet.com
CHARLOTTE, N.C., Oct. 11, 2019 (GLOBE NEWSWIRE) -- Coca-Cola Consolidated, Inc. (NASDAQ: COKE) announced that the Board of Directors has declared a dividend for the fourth quarter of 2019 of $0.25 per share on shares of the Company's Common Stock and Class B Common Stock payable on November 8, 2019 to shareholders of record as of the close of business on October 25, 2019. About Coca-Cola Consolidated, Inc. Coke Consolidated is the largest Coca-Cola bottler in the United States. Our Purpose is to honor God, serve others, pursue excellence and grow profitably. For 117 years, we have been deeply committed to the consumers, customers, and communities we serve and passionate about the broad portfolio of beverages and services we offer. We make, sell, and deliver beverages of The Coca-Cola Company and other partner companies in more than 300 brands and flavors to 66 million consumers in territories spanning 14 states and the District of Columbia. Headquartered in Charlotte, N.C., Coke Consolidated is traded on the NASDAQ Global Select Market under the symbol "COKE."
CHARLOTTE, N.C., Oct. 11, 2019 (GLOBE NEWSWIRE) -- Coca-Cola Consolidated, Inc. (NASDAQ: COKE) announced that the Board of Directors has declared a dividend for the fourth quarter of 2019 of $0.25 per share on shares of the Company's Common Stock and Class B Common Stock payable on November 8, 2019 to shareholders of record as of the close of business on October 25, 2019. About Coca-Cola Consolidated, Inc. Coke Consolidated is the largest Coca-Cola bottler in the United States. Our Purpose is to honor God, serve others, pursue excellence and grow profitably. For 117 years, we have been deeply committed to the consumers, customers, and communities we serve and passionate about the broad portfolio of beverages and services we offer. We make, sell, and deliver beverages of The Coca-Cola Company and other partner companies in more than 300 brands and flavors to 66 million consumers in territories spanning 14 states and the District of Columbia. Headquartered in Charlotte, N.C., Coke Consolidated is traded on the NASDAQ Global Select Market under the symbol "COKE."
Imaged obtained from Eatthis.com
Coca-Cola (NYSE: KO) latest stock valuation
So what is Coca-Cola's stock worth based on the release of their latest earnings report and their fiscal guidance provided? Based on Coca-Cola's latest earnings report and their outlook our valuation models provide a target (full value) price of Coca-Cola's stock at $45.95 a stock (up slightly from our 2nd quarter 2019 valuation of Coca-Cola) . Based on our target (full value) price we believe the stock of Coca-Cola's is overvalued.
We usually recommend that long term fundamental or value investors look to enter the stock at 10% below our target (full value) price which in this case is $44.95, so a good entry point into Coca-Cola's stock would be at $40.45 or below. We expect that the stock of Coca-Cola's will pull back in coming weeks and months to levels closer to our target (full value) price
We usually recommend that long term fundamental or value investors look to enter the stock at 10% below our target (full value) price which in this case is $44.95, so a good entry point into Coca-Cola's stock would be at $40.45 or below. We expect that the stock of Coca-Cola's will pull back in coming weeks and months to levels closer to our target (full value) price
Next earnings release of Coca-Cola
The 4th quarter 2019 earnings report of Coca-Cola is expected to be released late January 2020.