Coca-Cola (KO) AI Stock Analysis

• Market Cap: $296.31B
• Dividend Yield: 2.96%
• Average Volume (3M): 14.76M
• Price to Earnings (P/E): 27.6
• Beta (1Y): 0.14
• Revenue Growth: 1.15%
• EPS Growth: 0.28%
• Country: US
• Employees: 69,700
• Sector: Consumer Defensive
• Sector Strength: 67
• Industry: Beverages - Non-Alcoholic
• EPS (TTM): 0.73
• Shares Outstanding: 4,304,266,600
• 10 Day Avg. Volume: 16,463,285
• 30 Day Avg. Volume: 14,763,619
• PEG Ratio: 22.61
• Price to Book (P/B): 11.30
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -319.30
• Enterprise Value/Market Cap: 1.14
• Enterprise Value/Revenue: 1.80
• Enterprise Value/Gross Profit: 11.77
• Enterprise Value/Ebitda: 5.37
• 1Y Price Target: $79.53
• Price Target Upside: 14.04% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 16

• Rating: 76 Outperform
• Price Target: $79.00 ▲(13.28%Upside)

Coca-Cola's strong profitability and strategic initiatives make its stock appealing, but challenges in revenue growth and cash flow management, along with high leverage, pose risks. The robust earnings call and marketing strategies enhance its outlook, while technical indicators suggest caution in the short term.

Positive Factors

Acquisitions and Innovation

Strong growth from Coke's Fairlife acquisition supports analyst's view that KO can post sustained global topline growth.

Pricing Power

The market is missing Coke's much stronger pricing power than peers, which is proven by recent history, share gains, and solid execution.

Product Innovation

Innovation shift toward healthier products, including Coke Zero and zero-sugar products, plays a significant role in Coke's growth profile.

Negative Factors

Forex and Tax Headwinds

The key drag on EPS stems from forex headwinds and higher taxes due to global minimum tax regulations.

Tax and Interest Liability

The potential incremental tax and interest liability increased $400m, bringing the aggregate amount to ~$12.4b.

Tax Dispute Risk

A key risk includes uncertainty surrounding the IRS tax dispute appeal, which could take years to resolve.

Coca-Cola Business Overview & Revenue Model

Company Description

The Coca-Cola Company, headquartered in Atlanta, Georgia, is a leading global beverage corporation. It operates in the non-alcoholic beverage sector and is best known for producing the iconic Coca-Cola soft drink. The company offers a diverse portfolio of over 500 brands, including sparkling beverages, water, sports drinks, tea, juice, dairy, and plant-based options. With a presence in more than 200 countries, Coca-Cola's core operations involve manufacturing, distributing, and marketing beverage concentrates and syrups.

How the Company Makes Money

Coca-Cola primarily generates revenue through the sale of beverage concentrates and syrups to authorized bottling partners who manufacture, package, and distribute the final products to retailers and consumers. This franchised bottling system allows Coca-Cola to leverage its brand and marketing expertise while bottlers handle production and distribution logistics. Additionally, Coca-Cola earns revenue from direct sales of finished beverages to retailers, restaurants, and other outlets. Strategic partnerships and joint ventures, such as those with McDonald's and other major chains, further enhance its market presence and drive sales. The company's earnings are also bolstered by continuous innovation in product offerings and expansion into emerging markets, increasing brand visibility and consumer reach.

Coca-Cola Financial Statement Overview

Summary

Coca-Cola exhibits strong profitability and operational efficiency with high profit margins and a robust ROE. Nonetheless, challenges persist with declining revenue growth and cash flow generation, which could impact liquidity. The balance sheet is stable, but high leverage needs careful monitoring.

Income Statement

Coca-Cola's income statement reflects strong profitability with a stable gross profit margin of approximately 61% over the TTM period. The net profit margin remains robust at 23%, indicating efficient cost management. However, revenue growth is slightly negative at -0.4% TTM, suggesting a stabilization in top-line growth. Despite this, the company maintains high EBIT and EBITDA margins of 24.5% and 31.9%, respectively, underscoring its operational efficiency.

Balance Sheet

The balance sheet shows a healthy equity ratio of 25.8%, reflecting a solid capital structure. However, the debt-to-equity ratio stands at 1.87, indicating relatively high leverage, which may pose risks if not managed prudently. Return on equity is strong at 41.1%, suggesting effective use of shareholder funds to generate profits.

Cash Flow

Cash flow analysis reveals a significant decline in free cash flow growth, with the most recent TTM period showing a negative free cash flow of -$928 million. The operating cash flow to net income ratio is low at 0.1, which may indicate challenges in converting earnings into cash. The free cash flow to net income ratio is also concerning at -0.086, suggesting potential liquidity issues.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
46.89B	47.06B	45.75B	43.00B	38.66B	33.01B
	Gross Profit
28.64B	28.74B	27.23B	25.00B	23.30B	19.58B
	EBIT
11.51B	9.99B	11.31B	10.91B	10.31B	9.00B
	EBITDA
16.01B	15.81B	15.62B	13.81B	14.54B	12.66B
	Net Income Common Stockholders
10.78B	10.63B	10.71B	9.54B	9.77B	7.75B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
12.00B	12.85B	13.66B	11.63B	12.63B	10.91B
	Total Assets
101.72B	100.55B	97.70B	92.76B	94.35B	87.30B
	Total Debt
49.11B	44.52B	42.06B	39.15B	42.76B	42.79B
	Net Debt
40.69B	33.69B	32.70B	29.63B	33.08B	36.00B
	Total Liabilities
73.96B	74.18B	70.22B	66.94B	69.49B	66.01B
	Stockholders Equity
26.20B	24.86B	25.94B	24.11B	23.00B	19.30B
Cash Flow		Free Cash Flow
-928.00M	4.74B	9.75B	9.53B	11.26B	8.67B
	Operating Cash Flow
1.07B	6.80B	11.60B	11.02B	12.63B	9.84B
	Investing Cash Flow
1.13B	2.52B	-3.35B	-763.00M	-2.77B	-1.48B
	Financing Cash Flow
-3.88B	-6.91B	-8.31B	-10.25B	-6.79B	-8.07B

Coca-Cola Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 69.74
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KO, the sentiment is Positive. The current price of 69.74 is below the 20-day moving average (MA) of 70.77, below the 50-day MA of 71.01, and above the 200-day MA of 67.10, indicating a neutral trend. The MACD of -0.32 indicates Positive momentum. The RSI at 43.92 is Neutral, neither overbought nor oversold. The STOCH value of 9.82 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KO.

Coca-Cola Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CCEP	79 Outperform	$42.65B	27.76	17.43%	1.90%	11.73%	-15.34%
KO	76 Outperform	$296.31B	27.56	40.98%	2.96%	1.15%	0.28%
MNST	76 Outperform	$61.53B	41.65	20.00%	―	1.47%	-4.87%
PEP	73 Outperform	$176.97B	18.98	50.06%	4.41%	-0.38%	2.23%
KDP	71 Outperform	$45.61B	30.42	6.13%	2.74%	3.95%	-28.73%
COKE	69 Neutral	$9.34B	18.63	36.83%	0.93%	3.21%	31.84%
Sector *	65 Neutral	$26.93B	14.96	-6.25%	3.23%	0.98%	2.67%

Coca-Cola Corporate Events

Coca-Cola Streamlines Operations with Segment Reorganization

On January 1, 2025, Coca-Cola streamlined its operations by discontinuing its Global Ventures segment, integrating Costa, innocent, and doğadan into the Europe, Middle East, and Africa segment, while Costa’s ready-to-drink business and Monster-related fees were allocated to relevant geographic segments. This organizational change aims to simplify Coca-Cola’s structure without affecting previously reported financial results, potentially enhancing operational efficiency and focus.