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The global beverage giant, Coca-Cola (KO), has set its sights high for growth in emerging developed markets around the globe. Coca-Cola's products are available in virtually every country around the world except for a few countries such as Iran, North Korea, Cuba and Syria. Earlier this year, Coca-Cola returned to Myanmar after a more than 60-year hiatus. The brand is instantly recognizable around the world and has experienced a tremendous amount of success.

Much of Coca-Cola's success has come from its international operations. There is much to be excited about regarding strong growth prospects in Latin America and in the Pacific region. Probably the most intriguing fact about the growth potential is the consumption rates of the company's products in huge and growing countries such as Indonesia and China. According to the company, in 2011 Coca-Cola had a per capita consumption of 38 servings in China. In Indonesia this figure was 14 per capita servings for 2011. These numbers are petty compared to the per capita consumption in 2011 in more developed countries, such as the US and Australia where consumption averaged 403 and 309 servings per capita, respectively. This represents a key and vastly important opportunity for the company, and given growth trajectories in more developed countries, it appears that the company should be able to successfully grow in these important countries and regions.

Coca-Cola's eponymous soda drink has been under pressure in many developed countries recently, especially in the US and Canada, as health-conscious consumer have moved towards more healthy beverages, such as teas and flavored waters. Volume growth rates in these regions have suffered accordingly. This has been the focus on many recent earnings releases, and it appears that the stock has suffered, at least partly, because of this. However, this does not seem to be a major concern as this is largely a known problem, and Coca-Cola has made significant efforts to remedy this difficulty. The company has launched new serving sizes in North America and has also launched new tea drinks to try and jumpstart slowing volume growth.

Coca-Cola has a history of taking care of shareholders. The company has been a consistent dividend growth machine, and in February of this year announced that the company is increasing its dividend, making it the 50th consecutive year of increased dividend payments. This October, Coca-Cola launched a new, 500 million share, share repurchase program. Coca-Cola's global businesses throw off a lot of cash, and it appears that the management, led by CEO Muhtar Kent, has been efficiently allocating this cash flow. Recently, the company has launched large investment programs in Tajikistan, Chile and Vietnam just to name a few.

Getting to the numbers, Coca-Cola's third quarter results were mixed (press release). Beverage volume grew by 5% Yoy for the first nine months of the year. Additionally, cash from operations increased by 15% YoY for the first nine months of the year. These results are moderately encouraging. However, the EPS figures paint a less rosy picture. Comparable EPS for the first nine months of the year was up 2% YoY. The company attributes a portion of this less-than-impressive growth to currency headwinds experienced so far this year. Overall, this growth is nothing to be overly excited about, but for such a mature company, similar growth rates can be expected for the future.

Fundamentally, Coca-Cola appears to be rather expensive. While the company has historically traded at a premium to S&P 500 valuations, Coca-Cola's current year PE of roughly 19.4x appears to be less justifiable. Peers such as PepsiCo (PEP) and Dr. Pepper Snapple (DPS) trade at slightly more reasonable PE multiples of roughly 18.6x and 15.4x, respectively. Especially relative to growth rates, Coca-Cola seems to be too expensive to be considered a value play to make an investment in.

While Coca-Cola is a great company with very strong international growth, current valuation levels are too high to warrant this a value-play.

Source: Coca-Cola: Strong International Growth Prospects At Too High A Cost