Intrinsic value of Coca-Cola - KO

Previous Close

$45.28

  Intrinsic Value

$13.92

stock screener

  Rating & Target

str. sell

-69%

Previous close

$45.28

 
Intrinsic value

$13.92

 
Up/down potential

-69%

 
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
  12,023
  12,300
  12,616
  12,971
  13,364
  13,795
  14,265
  14,774
  15,322
  15,910
  16,539
  17,210
  17,925
  18,684
  19,490
  20,344
  21,248
  22,204
  23,215
  24,281
  25,407
  26,594
  27,845
  29,163
  30,551
  32,013
  33,552
  35,171
  36,874
  38,666
Interest expense (income), $m
  663
  2,575
  2,651
  2,741
  2,844
  2,959
  3,086
  3,226
  3,379
  3,544
  3,721
  3,912
  4,116
  4,334
  4,566
  4,812
  5,074
  5,351
  5,644
  5,954
  6,282
  6,628
  6,993
  7,379
  7,784
  8,212
  8,663
  9,137
  9,636
  10,161
  10,714
Earnings before tax, $m
  8,136
  4,899
  5,033
  5,183
  5,350
  5,534
  5,734
  5,951
  6,185
  6,437
  6,706
  8,657
  8,963
  9,288
  9,633
  10,000
  10,387
  10,797
  11,230
  11,688
  12,171
  12,680
  13,217
  13,783
  14,379
  15,006
  15,667
  16,362
  17,093
  17,862
  18,671
Tax expense, $m
  1,586
  1,323
  1,359
  1,399
  1,445
  1,494
  1,548
  1,607
  1,670
  1,738
  1,811
  2,337
  2,420
  2,508
  2,601
  2,700
  2,805
  2,915
  3,032
  3,156
  3,286
  3,424
  3,569
  3,721
  3,882
  4,052
  4,230
  4,418
  4,615
  4,823
  5,041
Net income, $m
  6,527
  3,576
  3,674
  3,784
  3,906
  4,040
  4,186
  4,344
  4,515
  4,699
  4,895
  6,319
  6,543
  6,780
  7,032
  7,300
  7,583
  7,882
  8,198
  8,532
  8,885
  9,257
  9,648
  10,061
  10,496
  10,954
  11,437
  11,944
  12,478
  13,039
  13,630

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
  89,623
  91,685
  94,041
  96,686
  99,618
  102,834
  106,336
  110,127
  114,211
  118,594
  123,283
  128,287
  133,614
  139,276
  145,284
  151,651
  158,390
  165,517
  173,048
  180,999
  189,389
  198,237
  207,563
  217,389
  227,738
  238,635
  250,104
  262,173
  274,870
  288,225
Adjusted assets (=assets-cash), $m
  64,754
  89,623
  91,685
  94,041
  96,686
  99,618
  102,834
  106,336
  110,127
  114,211
  118,594
  123,283
  128,287
  133,614
  139,276
  145,284
  151,651
  158,390
  165,517
  173,048
  180,999
  189,389
  198,237
  207,563
  217,389
  227,738
  238,635
  250,104
  262,173
  274,870
  288,225
Revenue / Adjusted assets
  0.646
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
  0.403
Average production assets, $m
  23,274
  28,858
  29,522
  30,281
  31,133
  32,077
  33,112
  34,240
  35,461
  36,776
  38,187
  39,697
  41,308
  43,023
  44,847
  46,781
  48,831
  51,001
  53,296
  55,721
  58,281
  60,983
  63,832
  66,835
  69,999
  73,331
  76,840
  80,533
  84,419
  88,507
  92,808
Working capital, $m
  7,478
  -6,212
  -6,355
  -6,519
  -6,702
  -6,905
  -7,128
  -7,371
  -7,634
  -7,917
  -8,220
  -8,546
  -8,892
  -9,262
  -9,654
  -10,071
  -10,512
  -10,979
  -11,473
  -11,995
  -12,546
  -13,128
  -13,741
  -14,387
  -15,069
  -15,786
  -16,541
  -17,336
  -18,173
  -19,053
  -19,979
Total debt, $m
  45,709
  49,097
  50,759
  52,658
  54,790
  57,153
  59,745
  62,568
  65,623
  68,915
  72,448
  76,227
  80,260
  84,554
  89,118
  93,960
  99,092
  104,524
  110,268
  116,338
  122,746
  129,509
  136,640
  144,157
  152,077
  160,418
  169,201
  178,445
  188,172
  198,406
  209,170
Total liabilities, $m
  64,208
  72,236
  73,898
  75,797
  77,929
  80,292
  82,884
  85,707
  88,762
  92,054
  95,587
  99,366
  103,399
  107,693
  112,257
  117,099
  122,231
  127,663
  133,407
  139,477
  145,885
  152,648
  159,779
  167,296
  175,216
  183,557
  192,340
  201,584
  211,311
  221,545
  232,309
Total equity, $m
  23,062
  17,387
  17,787
  18,244
  18,757
  19,326
  19,950
  20,629
  21,365
  22,157
  23,007
  23,917
  24,888
  25,921
  27,020
  28,185
  29,420
  30,728
  32,110
  33,571
  35,114
  36,741
  38,458
  40,267
  42,174
  44,181
  46,295
  48,520
  50,862
  53,325
  55,916
Total liabilities and equity, $m
  87,270
  89,623
  91,685
  94,041
  96,686
  99,618
  102,834
  106,336
  110,127
  114,211
  118,594
  123,283
  128,287
  133,614
  139,277
  145,284
  151,651
  158,391
  165,517
  173,048
  180,999
  189,389
  198,237
  207,563
  217,390
  227,738
  238,635
  250,104
  262,173
  274,870
  288,225
Debt-to-equity ratio
  1.982
  2.820
  2.850
  2.890
  2.920
  2.960
  2.990
  3.030
  3.070
  3.110
  3.150
  3.190
  3.220
  3.260
  3.300
  3.330
  3.370
  3.400
  3.430
  3.470
  3.500
  3.520
  3.550
  3.580
  3.610
  3.630
  3.650
  3.680
  3.700
  3.720
  3.740
Adjusted equity ratio
  0.201
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  6,527
  3,576
  3,674
  3,784
  3,906
  4,040
  4,186
  4,344
  4,515
  4,699
  4,895
  6,319
  6,543
  6,780
  7,032
  7,300
  7,583
  7,882
  8,198
  8,532
  8,885
  9,257
  9,648
  10,061
  10,496
  10,954
  11,437
  11,944
  12,478
  13,039
  13,630
Depreciation, amort., depletion, $m
  1,787
  4,549
  4,616
  4,692
  4,777
  4,871
  4,975
  5,088
  5,210
  5,341
  5,482
  3,970
  4,131
  4,302
  4,485
  4,678
  4,883
  5,100
  5,330
  5,572
  5,828
  6,098
  6,383
  6,683
  7,000
  7,333
  7,684
  8,053
  8,442
  8,851
  9,281
Funds from operations, $m
  8,575
  8,125
  8,290
  8,475
  8,682
  8,911
  9,161
  9,432
  9,725
  10,040
  10,378
  10,289
  10,674
  11,083
  11,517
  11,978
  12,466
  12,982
  13,528
  14,104
  14,713
  15,355
  16,032
  16,745
  17,496
  18,288
  19,121
  19,997
  20,920
  21,890
  22,911
Change in working capital, $m
  -221
  -122
  -143
  -163
  -183
  -203
  -223
  -243
  -263
  -283
  -304
  -325
  -347
  -369
  -392
  -416
  -441
  -467
  -494
  -522
  -551
  -582
  -613
  -646
  -681
  -717
  -755
  -795
  -837
  -880
  -926
Cash from operations, $m
  8,796
  8,247
  8,432
  8,639
  8,866
  9,114
  9,384
  9,675
  9,988
  10,323
  10,681
  10,614
  11,020
  11,452
  11,910
  12,394
  12,907
  13,449
  14,022
  14,626
  15,264
  15,936
  16,645
  17,391
  18,177
  19,005
  19,876
  20,792
  21,756
  22,770
  23,836
Maintenance CAPEX, $m
  0
  -2,830
  -2,886
  -2,952
  -3,028
  -3,113
  -3,208
  -3,311
  -3,424
  -3,546
  -3,678
  -3,819
  -3,970
  -4,131
  -4,302
  -4,485
  -4,678
  -4,883
  -5,100
  -5,330
  -5,572
  -5,828
  -6,098
  -6,383
  -6,683
  -7,000
  -7,333
  -7,684
  -8,053
  -8,442
  -8,851
New CAPEX, $m
  -2,262
  -557
  -664
  -759
  -852
  -944
  -1,036
  -1,128
  -1,221
  -1,315
  -1,411
  -1,510
  -1,611
  -1,715
  -1,823
  -1,935
  -2,050
  -2,170
  -2,295
  -2,425
  -2,560
  -2,701
  -2,849
  -3,003
  -3,164
  -3,332
  -3,509
  -3,693
  -3,886
  -4,088
  -4,300
Cash from investing activities, $m
  -999
  -3,387
  -3,550
  -3,711
  -3,880
  -4,057
  -4,244
  -4,439
  -4,645
  -4,861
  -5,089
  -5,329
  -5,581
  -5,846
  -6,125
  -6,420
  -6,728
  -7,053
  -7,395
  -7,755
  -8,132
  -8,529
  -8,947
  -9,386
  -9,847
  -10,332
  -10,842
  -11,377
  -11,939
  -12,530
  -13,151
Free cash flow, $m
  7,797
  4,860
  4,883
  4,928
  4,986
  5,057
  5,140
  5,236
  5,343
  5,462
  5,592
  5,286
  5,440
  5,606
  5,784
  5,975
  6,179
  6,396
  6,627
  6,872
  7,132
  7,407
  7,698
  8,005
  8,330
  8,673
  9,034
  9,415
  9,817
  10,240
  10,685
Issuance/(repayment) of debt, $m
  1,666
  1,412
  1,661
  1,899
  2,132
  2,363
  2,592
  2,823
  3,056
  3,292
  3,533
  3,779
  4,033
  4,294
  4,563
  4,842
  5,132
  5,432
  5,744
  6,070
  6,409
  6,762
  7,131
  7,517
  7,920
  8,341
  8,783
  9,244
  9,728
  10,234
  10,764
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
  1,412
  1,661
  1,899
  2,132
  2,363
  2,592
  2,823
  3,056
  3,292
  3,533
  3,779
  4,033
  4,294
  4,563
  4,842
  5,132
  5,432
  5,744
  6,070
  6,409
  6,762
  7,131
  7,517
  7,920
  8,341
  8,783
  9,244
  9,728
  10,234
  10,764
Total cash flow (excl. dividends), $m
  7,289
  6,272
  6,544
  6,827
  7,118
  7,420
  7,733
  8,059
  8,399
  8,754
  9,125
  9,065
  9,472
  9,900
  10,348
  10,817
  11,311
  11,828
  12,371
  12,942
  13,540
  14,169
  14,829
  15,522
  16,250
  17,014
  17,817
  18,659
  19,544
  20,474
  21,449
Retained Cash Flow (-), $m
  2,492
  -315
  -400
  -457
  -513
  -569
  -624
  -679
  -735
  -792
  -850
  -910
  -971
  -1,034
  -1,098
  -1,166
  -1,235
  -1,307
  -1,383
  -1,461
  -1,543
  -1,628
  -1,716
  -1,809
  -1,906
  -2,008
  -2,114
  -2,225
  -2,341
  -2,463
  -2,591
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
 
  212
  217
  222
  227
  234
  241
  249
  257
  266
  276
  287
  298
  310
  323
  337
  351
  367
  383
  400
  418
  438
  458
  479
  502
  526
  551
  577
  605
  634
  665
Cash available for distribution, $m
 
  5,957
  6,144
  6,370
  6,605
  6,851
  7,109
  7,379
  7,663
  7,961
  8,275
  8,155
  8,502
  8,866
  9,249
  9,652
  10,075
  10,521
  10,989
  11,481
  11,998
  12,541
  13,113
  13,713
  14,344
  15,006
  15,703
  16,434
  17,203
  18,010
  18,859
Discount rate, %
 
  6.80
  7.14
  7.50
  7.87
  8.27
  8.68
  9.11
  9.57
  10.05
  10.55
  11.08
  11.63
  12.21
  12.82
  13.46
  14.14
  14.84
  15.59
  16.37
  17.18
  18.04
  18.94
  19.89
  20.89
  21.93
  23.03
  24.18
  25.39
  26.66
  27.99
PV of cash for distribution, $m
 
  5,578
  5,353
  5,128
  4,878
  4,606
  4,314
  4,008
  3,689
  3,364
  3,035
  2,568
  2,271
  1,983
  1,708
  1,451
  1,215
  1,001
  810
  645
  503
  385
  288
  211
  151
  106
  72
  47
  31
  19
  11
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 29.7
Price to Sales 4.6
Price to Book 8.4
Price to Tangible Book
Price to Cash Flow 22.1
Price to Free Cash Flow 29.7
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 6.8%, 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 0.6%.

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 79.9%.

Life of production assets of 10 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 -17.2%. 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 4272 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 $193.4 billion.

RELATED COMPANIES Price Int.Val. Rating
COKE Coca-Cola Bott 138.20 1,144.90  str.buy
DPS Dr Pepper Snap 123.66 74.32  sell
PEP PepsiCo 116.01 101.62  hold
CCE Coca-Cola Euro 41.96 157.88  str.buy
KOF Coca-Cola Fems 61.13 6.06  str.sell

COMPANY NEWS

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▶ No bubbles for beer: CO2 shortage hits Europe   [Jun-27-18 02:54PM  CNBC Videos]
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▶ Report: Coca-Cola weighs $3.4B bid for malted milk drink   [07:07AM  American City Business Journals]
▶ [$$] Brazil trucker strike hits suppliers of consumer staples   [Jun-17-18 12:16AM  Financial Times]
▶ Coca-Cola's new China production plant continues environmentally conscious brand push   [Jun-15-18 03:02PM  American City Business Journals]
▶ No Coke, no Pepsi: Bottlers leave Mexican city hit by crime   [Jun-13-18 08:19PM  Associated Press]
▶ SunTrust Banks co-COO elected chair of World Affairs Council of Atlanta   [01:58PM  American City Business Journals]
▶ Why Coca-Cola's Stock May Surge 8% Higher   [11:30AM  Investopedia]
▶ Monster: Coca-Cola Takeover Talk Bubbles Back Up   [Jun-12-18 11:35AM  Barrons.com]
▶ Better Buy: Coca-Cola vs. Philip Morris   [Jun-11-18 02:33PM  Motley Fool]
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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