Student Essay

11977 Words Nov 13th, 2013 48 Pages
Stock Report | November 2, 2013 | NYS Symbol: KO | KO is in the S&P 500

Coca-Cola Co (The)
S&P Recommendation STRONG BUY GICS Sector Consumer Staples Sub-Industry Soft Drinks Key Stock Statistics (Source S&P, Vickers, company reports) 52-Wk Range $43.43– 35.58 Trailing 12-Month EPS $1.93 Trailing 12-Month P/E 20.5 $10K Invested 5 Yrs Ago $20,900 Price Performance
30-Week Mov. Avg. 12-Mo. Target Price
45 40 35 30


Price $39.61 (as of Nov 1, 2013)

12-Mo. Target Price $44.00

Investment Style Large-Cap Growth

Summary The world's largest soft drink company, KO also has a sizable fruit juice business.

S&P Oper. EPS 2013E S&P Oper. EPS 2014E P/E on S&P Oper. EPS 2013E Common Shares Outstg. (M)

2.09 2.27 19.0
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Investment Rationale/Risk

We look for growth in volumes of 3% to 4% for the next couple of years, with carbonated volumes increasing at a low single digit rate and non-carbonated volumes rising at a high single digit rate. For 2013, we project that sales will fall 2%, weighed down by negative foreign exchange and the deconsolidation of certain bottlers to reflect recently completed transactions. For 2014, we see about a 4% rise in sales. We expect comparable operating profit to grow in 2013 as higher prices and cost-cutting initiatives offset an unfavorable mix, with lowermargin emerging markets growing faster than developed ones. With commodity cost increases slowing, we project sweetener, juice, metals and PET costs will rise $100 million in 2013 versus $225 million in 2012. We see about a four percentage point negative impact from foreign exchange to operating income growth. Assuming an effective tax rate of 23%, down from 24% in 2012, and fewer shares outstanding, we estimate EPS of $2.09 for 2013, up from operating EPS of $2.01 (adjusted) in 2012, before one-time charges. KO is targeting stock repurchases of between $3.0 billion and $3.5 billion for 2013. We estimate EPS of $2.27 in 2014.


In April, KO accelerated the refranchising of its U.S. bottling system by announcing partnerships with five U.S. bottling partners. These transactions could include an outright sale, a

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