The Coca-Cola Company
The Coca-Cola Company Fundamental Analysis
The Coca-Cola Company (KO) shows moderate financial fundamentals with a PE ratio of 25.44, profit margin of 27.34%, and ROE of 44.35%. The company generates $47.9B in annual revenue with weak year-over-year growth of 2.86%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 52.9/100 based on profitability, valuation, growth, and balance sheet metrics. The C grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze KO's fundamental strength across five key dimensions:
Efficiency Score
ExcellentKO demonstrates superior asset utilization.
Valuation Score
WeakKO trades at a premium to fair value.
Growth Score
WeakKO faces weak or negative growth trends.
Financial Health Score
ModerateKO shows balanced financial health with some risks.
Profitability Score
ExcellentKO achieves industry-leading margins.
Key Financial Metrics
Is KO Expensive or Cheap?
P/E Ratio
KO trades at 25.44 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, KO's PEG of 38.54 indicates potential overvaluation.
Price to Book
The market values The Coca-Cola Company at 10.37 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 15.95 times EBITDA. This signals the market has high growth expectations.
How Well Does KO Make Money?
Net Profit Margin
For every $100 in sales, The Coca-Cola Company keeps $27.34 as profit after all expenses.
Operating Margin
Core operations generate 28.71 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $44.35 in profit for every $100 of shareholder equity.
ROA
The Coca-Cola Company generates $12.50 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
The Coca-Cola Company produces operating cash flow of $7.41B, showing steady but balanced cash generation.
Free Cash Flow
The Coca-Cola Company generates strong free cash flow of $5.30B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $1.23 in free cash annually.
FCF Yield
KO converts 1.59% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
25.44
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
38.54
vs 25 benchmark
P/B Ratio
Price to book value ratio
10.37
vs 25 benchmark
P/S Ratio
Price to sales ratio
6.96
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
1.41
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.46
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.44
vs 25 benchmark
ROA
Return on assets percentage
0.13
vs 25 benchmark
ROCE
Return on capital employed
0.16
vs 25 benchmark
How KO Stacks Against Its Sector Peers
| Metric | KO Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 25.44 | 22.53 | Worse (Expensive) |
| ROE | 44.35% | 1238.00% | Weak |
| Net Margin | 27.34% | -6235.00% (disorted) | Strong |
| Debt/Equity | 1.41 | 1.25 | Neutral |
| Current Ratio | 1.46 | 2.41 | Neutral |
| ROA | 12.50% | -157319.00% (disorted) | Strong |
KO outperforms its industry in 2 out of 6 key metrics, particularly excelling in Net Margin, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews The Coca-Cola Company's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
25.32%
Industry Style: Defensive, Dividend, Low Volatility
High GrowthEPS CAGR
18.27%
Industry Style: Defensive, Dividend, Low Volatility
High GrowthFCF CAGR
-35.51%
Industry Style: Defensive, Dividend, Low Volatility
Declining