Intrinsic value of Coca-Cola - KO

Previous Close

$49.86

  Intrinsic Value

$13.41

stock screener

  Rating & Target

str. sell

-73%

Previous close

$49.86

 
Intrinsic value

$13.41

 
Up/down potential

-73%

 
Rating

str. sell

We calculate the intrinsic value of KO stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -5.49
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  41,863
  36,118
  36,949
  37,899
  38,965
  40,146
  41,442
  42,853
  44,381
  46,027
  47,793
  49,683
  51,700
  53,847
  56,128
  58,549
  61,115
  63,831
  66,704
  69,738
  72,943
  76,324
  79,889
  83,648
  87,608
  91,779
  96,170
  100,792
  105,656
  110,773
  116,155
Variable operating expenses, $m
 
  28,645
  29,265
  29,975
  30,771
  31,653
  32,622
  33,676
  34,817
  36,047
  37,366
  37,114
  38,621
  40,224
  41,929
  43,738
  45,654
  47,683
  49,829
  52,096
  54,490
  57,015
  59,679
  62,487
  65,445
  68,560
  71,841
  75,293
  78,927
  82,749
  86,770
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  34,494
  28,645
  29,265
  29,975
  30,771
  31,653
  32,622
  33,676
  34,817
  36,047
  37,366
  37,114
  38,621
  40,224
  41,929
  43,738
  45,654
  47,683
  49,829
  52,096
  54,490
  57,015
  59,679
  62,487
  65,445
  68,560
  71,841
  75,293
  78,927
  82,749
  86,770
Operating income, $m
  7,369
  7,474
  7,684
  7,924
  8,194
  8,493
  8,820
  9,177
  9,564
  9,980
  10,427
  12,569
  13,079
  13,622
  14,199
  14,812
  15,461
  16,148
  16,875
  17,642
  18,453
  19,308
  20,211
  21,161
  22,163
  23,218
  24,329
  25,498
  26,729
  28,023
  29,385
EBITDA, $m
  9,156
  9,993
  10,223
  10,485
  10,780
  11,107
  11,466
  11,856
  12,279
  12,734
  13,223
  13,746
  14,304
  14,898
  15,529
  16,199
  16,909
  17,660
  18,455
  19,295
  20,181
  21,116
  22,103
  23,143
  24,238
  25,392
  26,607
  27,886
  29,232
  30,647
  32,137
Interest expense (income), $m
  663
  2,575
  2,645
  2,722
  2,810
  2,909
  3,019
  3,139
  3,270
  3,412
  3,565
  3,729
  3,905
  4,092
  4,292
  4,504
  4,729
  4,967
  5,219
  5,486
  5,768
  6,066
  6,380
  6,711
  7,060
  7,428
  7,815
  8,223
  8,653
  9,104
  9,580
Earnings before tax, $m
  8,136
  4,899
  5,039
  5,202
  5,384
  5,583
  5,801
  6,038
  6,294
  6,568
  6,862
  8,840
  9,174
  9,530
  9,908
  10,308
  10,732
  11,181
  11,656
  12,156
  12,685
  13,243
  13,831
  14,450
  15,103
  15,790
  16,514
  17,275
  18,076
  18,919
  19,805
Tax expense, $m
  1,586
  1,323
  1,361
  1,405
  1,454
  1,507
  1,566
  1,630
  1,699
  1,773
  1,853
  2,387
  2,477
  2,573
  2,675
  2,783
  2,898
  3,019
  3,147
  3,282
  3,425
  3,576
  3,734
  3,902
  4,078
  4,263
  4,459
  4,664
  4,881
  5,108
  5,347
Net income, $m
  6,527
  3,576
  3,678
  3,797
  3,930
  4,076
  4,235
  4,408
  4,594
  4,795
  5,009
  6,453
  6,697
  6,957
  7,233
  7,525
  7,835
  8,162
  8,509
  8,874
  9,260
  9,667
  10,097
  10,549
  11,025
  11,527
  12,055
  12,611
  13,196
  13,811
  14,458

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  22,516
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  87,270
  79,556
  81,385
  83,477
  85,825
  88,427
  91,282
  94,391
  97,756
  101,381
  105,272
  109,434
  113,876
  118,605
  123,631
  128,964
  134,615
  140,598
  146,924
  153,609
  160,667
  168,114
  175,968
  184,246
  192,969
  202,156
  211,828
  222,009
  232,722
  243,993
  255,847
Adjusted assets (=assets-cash), $m
  64,754
  79,556
  81,385
  83,477
  85,825
  88,427
  91,282
  94,391
  97,756
  101,381
  105,272
  109,434
  113,876
  118,605
  123,631
  128,964
  134,615
  140,598
  146,924
  153,609
  160,667
  168,114
  175,968
  184,246
  192,969
  202,156
  211,828
  222,009
  232,722
  243,993
  255,847
Revenue / Adjusted assets
  0.646
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
Average production assets, $m
  23,274
  19,251
  19,694
  20,200
  20,768
  21,398
  22,089
  22,841
  23,655
  24,532
  25,474
  26,481
  27,556
  28,700
  29,916
  31,207
  32,574
  34,022
  35,553
  37,171
  38,878
  40,681
  42,581
  44,584
  46,695
  48,918
  51,259
  53,722
  56,314
  59,042
  61,910
Working capital, $m
  7,478
  5,273
  5,395
  5,533
  5,689
  5,861
  6,051
  6,257
  6,480
  6,720
  6,978
  7,254
  7,548
  7,862
  8,195
  8,548
  8,923
  9,319
  9,739
  10,182
  10,650
  11,143
  11,664
  12,213
  12,791
  13,400
  14,041
  14,716
  15,426
  16,173
  16,959
Total debt, $m
  45,709
  48,978
  50,407
  52,040
  53,874
  55,907
  58,136
  60,564
  63,192
  66,024
  69,062
  72,313
  75,782
  79,475
  83,400
  87,566
  91,980
  96,652
  101,593
  106,813
  112,326
  118,142
  124,276
  130,741
  137,554
  144,728
  152,283
  160,234
  168,601
  177,403
  186,662
Total liabilities, $m
  64,208
  62,133
  63,562
  65,195
  67,029
  69,062
  71,291
  73,719
  76,347
  79,179
  82,217
  85,468
  88,937
  92,630
  96,555
  100,721
  105,135
  109,807
  114,748
  119,968
  125,481
  131,297
  137,431
  143,896
  150,709
  157,883
  165,438
  173,389
  181,756
  190,558
  199,817
Total equity, $m
  23,062
  17,423
  17,823
  18,281
  18,796
  19,366
  19,991
  20,672
  21,409
  22,202
  23,055
  23,966
  24,939
  25,974
  27,075
  28,243
  29,481
  30,791
  32,176
  33,640
  35,186
  36,817
  38,537
  40,350
  42,260
  44,272
  46,390
  48,620
  50,966
  53,434
  56,031
Total liabilities and equity, $m
  87,270
  79,556
  81,385
  83,476
  85,825
  88,428
  91,282
  94,391
  97,756
  101,381
  105,272
  109,434
  113,876
  118,604
  123,630
  128,964
  134,616
  140,598
  146,924
  153,608
  160,667
  168,114
  175,968
  184,246
  192,969
  202,155
  211,828
  222,009
  232,722
  243,992
  255,848
Debt-to-equity ratio
  1.982
  2.810
  2.830
  2.850
  2.870
  2.890
  2.910
  2.930
  2.950
  2.970
  3.000
  3.020
  3.040
  3.060
  3.080
  3.100
  3.120
  3.140
  3.160
  3.180
  3.190
  3.210
  3.220
  3.240
  3.250
  3.270
  3.280
  3.300
  3.310
  3.320
  3.330
Adjusted equity ratio
  0.201
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  6,527
  3,576
  3,678
  3,797
  3,930
  4,076
  4,235
  4,408
  4,594
  4,795
  5,009
  6,453
  6,697
  6,957
  7,233
  7,525
  7,835
  8,162
  8,509
  8,874
  9,260
  9,667
  10,097
  10,549
  11,025
  11,527
  12,055
  12,611
  13,196
  13,811
  14,458
Depreciation, amort., depletion, $m
  1,787
  2,519
  2,539
  2,561
  2,587
  2,615
  2,645
  2,679
  2,715
  2,754
  2,796
  1,177
  1,225
  1,276
  1,330
  1,387
  1,448
  1,512
  1,580
  1,652
  1,728
  1,808
  1,892
  1,982
  2,075
  2,174
  2,278
  2,388
  2,503
  2,624
  2,752
Funds from operations, $m
  8,575
  6,095
  6,217
  6,359
  6,517
  6,690
  6,880
  7,087
  7,309
  7,549
  7,805
  7,630
  7,922
  8,232
  8,562
  8,912
  9,282
  9,674
  10,089
  10,526
  10,988
  11,475
  11,989
  12,530
  13,101
  13,701
  14,333
  14,999
  15,699
  16,435
  17,209
Change in working capital, $m
  -221
  103
  121
  139
  156
  172
  189
  206
  223
  240
  258
  276
  294
  313
  333
  353
  375
  397
  419
  443
  468
  494
  521
  549
  578
  609
  641
  675
  710
  747
  786
Cash from operations, $m
  8,796
  5,992
  6,096
  6,220
  6,361
  6,518
  6,691
  6,881
  7,086
  7,308
  7,547
  7,354
  7,627
  7,919
  8,229
  8,559
  8,908
  9,278
  9,669
  10,083
  10,520
  10,982
  11,468
  11,982
  12,522
  13,092
  13,692
  14,324
  14,988
  15,688
  16,424
Maintenance CAPEX, $m
  0
  -838
  -856
  -875
  -898
  -923
  -951
  -982
  -1,015
  -1,051
  -1,090
  -1,132
  -1,177
  -1,225
  -1,276
  -1,330
  -1,387
  -1,448
  -1,512
  -1,580
  -1,652
  -1,728
  -1,808
  -1,892
  -1,982
  -2,075
  -2,174
  -2,278
  -2,388
  -2,503
  -2,624
New CAPEX, $m
  -2,262
  -391
  -443
  -506
  -568
  -630
  -691
  -752
  -814
  -877
  -941
  -1,007
  -1,075
  -1,144
  -1,216
  -1,291
  -1,368
  -1,448
  -1,531
  -1,618
  -1,708
  -1,802
  -1,900
  -2,003
  -2,111
  -2,223
  -2,341
  -2,464
  -2,592
  -2,727
  -2,869
Cash from investing activities, $m
  -999
  -1,229
  -1,299
  -1,381
  -1,466
  -1,553
  -1,642
  -1,734
  -1,829
  -1,928
  -2,031
  -2,139
  -2,252
  -2,369
  -2,492
  -2,621
  -2,755
  -2,896
  -3,043
  -3,198
  -3,360
  -3,530
  -3,708
  -3,895
  -4,093
  -4,298
  -4,515
  -4,742
  -4,980
  -5,230
  -5,493
Free cash flow, $m
  7,797
  4,763
  4,798
  4,839
  4,895
  4,965
  5,049
  5,147
  5,257
  5,380
  5,515
  5,214
  5,376
  5,550
  5,737
  5,938
  6,153
  6,382
  6,626
  6,885
  7,160
  7,452
  7,760
  8,086
  8,430
  8,794
  9,177
  9,582
  10,008
  10,458
  10,931
Issuance/(repayment) of debt, $m
  1,666
  1,293
  1,429
  1,634
  1,834
  2,032
  2,230
  2,428
  2,628
  2,831
  3,039
  3,251
  3,469
  3,693
  3,925
  4,165
  4,414
  4,672
  4,941
  5,221
  5,512
  5,816
  6,134
  6,466
  6,812
  7,175
  7,554
  7,951
  8,367
  8,802
  9,259
Issuance/(repurchase) of shares, $m
  -2,247
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -502
  1,293
  1,429
  1,634
  1,834
  2,032
  2,230
  2,428
  2,628
  2,831
  3,039
  3,251
  3,469
  3,693
  3,925
  4,165
  4,414
  4,672
  4,941
  5,221
  5,512
  5,816
  6,134
  6,466
  6,812
  7,175
  7,554
  7,951
  8,367
  8,802
  9,259
Total cash flow (excl. dividends), $m
  7,289
  6,055
  6,227
  6,472
  6,729
  6,997
  7,279
  7,574
  7,885
  8,211
  8,554
  8,465
  8,845
  9,243
  9,663
  10,104
  10,567
  11,055
  11,567
  12,106
  12,673
  13,268
  13,894
  14,551
  15,242
  15,969
  16,732
  17,533
  18,375
  19,260
  20,189
Retained Cash Flow (-), $m
  2,492
  -351
  -401
  -458
  -514
  -570
  -625
  -681
  -737
  -794
  -852
  -912
  -973
  -1,036
  -1,101
  -1,168
  -1,238
  -1,310
  -1,385
  -1,464
  -1,546
  -1,631
  -1,720
  -1,813
  -1,910
  -2,012
  -2,118
  -2,230
  -2,346
  -2,468
  -2,596
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  5,705
  5,826
  6,014
  6,215
  6,428
  6,654
  6,894
  7,148
  7,417
  7,702
  7,554
  7,872
  8,208
  8,562
  8,936
  9,329
  9,745
  10,182
  10,642
  11,127
  11,637
  12,174
  12,738
  13,332
  13,957
  14,613
  15,304
  16,029
  16,792
  17,593
Discount rate, %
 
  6.60
  6.93
  7.28
  7.64
  8.02
  8.42
  8.84
  9.29
  9.75
  10.24
  10.75
  11.29
  11.85
  12.45
  13.07
  13.72
  14.41
  15.13
  15.88
  16.68
  17.51
  18.39
  19.31
  20.27
  21.29
  22.35
  23.47
  24.64
  25.87
  27.17
PV of cash for distribution, $m
 
  5,352
  5,095
  4,872
  4,629
  4,370
  4,096
  3,809
  3,513
  3,210
  2,906
  2,457
  2,181
  1,913
  1,657
  1,416
  1,192
  989
  807
  647
  509
  393
  297
  220
  159
  112
  77
  52
  34
  21
  13
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

The Coca-Cola Company is a beverage company. The Company owns or licenses and markets non-alcoholic beverage brands, primarily sparkling beverages and a range of still beverages, such as waters, flavored waters and enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, sports drinks, dairy and energy drinks. The Company's segments include Europe, Middle East and Africa; Latin America; North America; Asia Pacific; Bottling Investments, and Corporate. The Company owns and markets a range of non-alcoholic sparkling beverage brands, including Coca-Cola, Diet Coke, Fanta and Sprite. The Company owns or licenses and markets over 500 non-alcoholic beverage brands. The Company markets, manufactures and sells beverage concentrates, which are referred to as beverage bases, and syrups, including fountain syrups, and finished sparkling and still beverages.

FINANCIAL RATIOS  of  Coca-Cola (KO)

Valuation Ratios
P/E Ratio 32.8
Price to Sales 5.1
Price to Book 9.3
Price to Tangible Book
Price to Cash Flow 24.3
Price to Free Cash Flow 32.7
Growth Rates
Sales Growth Rate -5.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -11.4%
Cap. Spend. - 3 Yr. Gr. Rate -2.4%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 128.7%
Total Debt to Equity 198.2%
Interest Coverage 13
Management Effectiveness
Return On Assets 8%
Ret/ On Assets - 3 Yr. Avg. 8.2%
Return On Total Capital 9.4%
Ret/ On T. Cap. - 3 Yr. Avg. 9.9%
Return On Equity 26.9%
Return On Equity - 3 Yr. Avg. 25.2%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 60.7%
Gross Margin - 3 Yr. Avg. 60.8%
EBITDA Margin 25.3%
EBITDA Margin - 3 Yr. Avg. 26.1%
Operating Margin 17.6%
Oper. Margin - 3 Yr. Avg. 17.8%
Pre-Tax Margin 19.4%
Pre-Tax Margin - 3 Yr. Avg. 20.5%
Net Profit Margin 15.6%
Net Profit Margin - 3 Yr. Avg. 15.9%
Effective Tax Rate 19.5%
Eff/ Tax Rate - 3 Yr. Avg. 22.1%
Payout Ratio 92.6%

KO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KO stock intrinsic value calculation we used $35410 million for the last fiscal year's total revenue generated by Coca-Cola. The default revenue input number comes from 2016 income statement of Coca-Cola. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our KO stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.6%, whose default value for KO is calculated based on our internal credit rating of Coca-Cola, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Coca-Cola.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of KO stock the variable cost ratio is equal to 79.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for KO stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Coca-Cola.

Corporate tax rate of 27% is the nominal tax rate for Coca-Cola. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the KO stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for KO are equal to 53.3%.

Life of production assets of 22.5 years is the average useful life of capital assets used in Coca-Cola operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for KO is equal to 14.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $17072 million for Coca-Cola - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 4252.92 million for Coca-Cola is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Coca-Cola at the current share price and the inputted number of shares is $212.1 billion.

RELATED COMPANIES Price Int.Val. Rating
COKE Coca-Cola Bott 189.88 303.09  str.buy
PEP PepsiCo 117.14 118.49  hold
CCE Coca-Cola Euro 46.72 190.11  str.buy
KOF Coca-Cola Fems 59.66 1,500.94  str.buy

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Financial statements of KO
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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