More Than A Dozen Reasons To Love Coca-Cola

May.21.12 | About: The Coca-Cola (KO)

Coca-Cola (NYSE:KO), incorporated in 1919, is the world's largest soft drink maker. It owns or licenses and markets more than 500 beverages. In Dec. 2011, it purchased Great Plains Coca-Cola bottling company. In Dec 2011, it also acquired a minority interest in Coca Cola Central Japan Company.

Reasons to be bullish one Coca Cola Co (KO)

  • A decent quarterly earnings growth rate of 7.9%.
  • It is a well-diversified company. Over the past 10 years, it has aggressively expanded its operations in emerging markets. Over 48% of its revenue comes from overseas. Asia accounts for 15% of its net revenues, Latin America for 13%, Europe for 13% and Eurasia and Africa account for 7%.
  • An operating margin of 23.4%.
  • Profit margins of 19%.
  • A huge levered free cash flow of $6.9 billion.
  • A five-year dividend growth rate of 8.16%.
  • A good five-year sales growth rate of 11%.
  • Cash flow per share increased from $3.61 in 2009 to $4.71 in 2011.
  • Annual EPS before NRI increased from $2.70 in 2007 to $3.84 in 2011.
  • Sales increased by roughly 50% from $30.9 billion to $46.5 billion.
  • A low payout ratio of 53%.
  • A decent 3-5 year projected EPS growth rate of 7.86%.
  • EBITDA increased from $10.5 billion in 2009 to $13.8 billion in 2011.
  • Year over year projected growth rates of 6.5% and 9.8% for 2012 and 2013 respectively.
  • A historical five year EPS growth rate of 8.5%.
  • A manageable long-term debt to equity ratio of 0.50.
  • A great interest coverage ratio of 31.9.
  • A strong five-year ROE average of 30%.
  • $100K invested for 10 years would have grown to $197K. If the dividends were reinvested the rate of return would be far higher.

Suggested strategy

There is a pretty good level of support in the 68.50-70.00 ranges. We would divide our money into 2-3 lots and deploy one lot if it trades in this range. As stocks tend to overshoot both to the upside and downside, there is a chance that it could trade down to the 63.50-65.00 ranges. If this comes to pass investors can deploy another lot into Coca Cola.

Company: Coca Cola Co

Growth

  1. Net Income ($mil) 12/2011 = 9262
  2. Net Income ($mil) 12/2010 = 12834
  3. Net Income ($mil) 12/2009 = 7605
  1. EBITDA ($mil) 12/2011 = 13810
  2. EBITDA ($mil) 12/2010 = 16419
  3. EBITDA ($mil) 12/2009 = 10537
  4. Cash Flow ($/share) 12/2011 = 4.79
  5. Cash Flow ($/share) 12/2010 = 4.13
  6. Cash Flow ($/share) 12/2009 = 3.61
  1. Sales ($mil) 12/2011 = 46542
  2. Sales ($mil) 12/2010 = 35119
  3. Sales ($mil) 12/2009 = 30990
  1. Annual EPS before NRI 12/2007 = 2.7
  2. Annual EPS before NRI 12/2008 = 3.15
  3. Annual EPS before NRI 12/2009 = 3.06
  4. Annual EPS before NRI 12/2010 = 3.49
  5. Annual EPS before NRI 12/2011 = 3.84

Dividend history

  1. Dividend Yield = 2.80
  2. Dividend Yield 5 Year Average 12/2011 = 2.91
  3. Dividend 5 year Growth 12/2011 = 8.16

Dividend sustainability

  1. Payout Ratio 09/2011 = 0.53
  2. Payout Ratio 5 Year Average 12/2011 = 0.52

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 7.86
  2. EPS Growth Quarterly(1)/Q(-3) = -103.49
  3. 5 Year History EPS Growth 12/2011 = 8.5
  4. ROE 5 Year Average 12/2011 = 30.46
  5. Current Ratio 12/2011 = 1.13
  6. Current Ratio 5 Year Average = 1.09
  7. Quick Ratio = 0.92
  8. Cash Ratio = 0.72
  9. Interest Coverage Quarterly = 31.97

Other interesting companies

For investors looking for additional ideas, we have provided detailed data on four additional companies. An explanation on the many key ratios covered in this article can be found here - Alcatel-Lucent: Time To Buy Or Flee?

Company: Potash Corp. of Saskatchewan, Inc. (NYSE:POT)

Basic Key ratios

  1. Percentage Held by Insiders = 3.09
  2. Relative Strength 52 weeks = 39
  3. Dividend 5-year Growth = 20.01
  4. Cash Flow 5-year Average = 2.32
  5. Dividend Yield 5-Year Average = 0.4

Growth

  1. Net Income ($mil) 12/2011 = 3081
  2. Net Income ($mil) 12/2010 = 1775
  3. Net Income ($mil) 12/2009 = 981
  4. Net Income Reported Quarterly ($mil) = 491
  1. EBITDA ($mil) 12/2011 = 4787
  2. EBITDA ($mil) 12/2010 = 3043
  3. EBITDA ($mil) 12/2009 = 1503
  1. Cash Flow ($/share) 12/2011 = 4.16
  2. Cash Flow ($/share) 12/2010 = 2.58
  3. Cash Flow ($/share) 12/2009 = 1.46
  1. Sales ($mil) 12/2011 = 8715
  2. Sales ($mil) 12/2010 = 6539
  3. Sales ($mil) 12/2009 = 3977
  1. Annual EPS before NRI 12/2007 = 1.13
  2. Annual EPS before NRI 12/2008 = 3.67
  3. Annual EPS before NRI 12/2009 = 1.08
  4. Annual EPS before NRI 12/2010 = 2.04
  5. Annual EPS before NRI 12/2011 = 3.51

Dividend history

  1. Dividend Yield = 1.45
  2. Dividend Yield 5 Year Average 12/2011 = 0.4
  3. Dividend 5 year Growth 12/2011 = 20.01

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 12.6
  2. 5 Year History EPS Growth 12/2011 = 18.88
  3. ROE 5 Year Average 12/2011 = 33.28
  4. Return on Investment 12/2011 = 24.64
  5. Debt/Total Cap 5 Year Average 12/2011 = 28.56
  1. Current Ratio 12/2011 = 1.05
  2. Current Ratio 5 Year Average = 1.25
  3. Quick Ratio = 0.76
  4. Interest Coverage Quarterly = 10.21

Valuation

  1. Book Value Quarterly = 9.74
  2. Price/ Book = 3.98
  3. Price/ Cash Flow = 9.31

Company: 3M Co (NYSE:MMM)

Basic Key ratios

  1. Percentage Held by Insiders = 0.74
  2. Number of Institutional Sellers 12 Weeks = 4
  3. Relative Strength 52 weeks = 55
  4. Dividend 5-year Growth = 3.54
  5. Cash Flow 5-year Average = 6.79
  6. Dividend Yield 5-Year Average = 2.69

Growth

  1. Net Income ($mil) 12/2011 = 4283
  2. Net Income ($mil) 12/2010 = 4085
  3. Net Income ($mil) 12/2009 = 3193
  4. Net Income Reported Quarterly ($mil) = 1125
  1. EBITDA ($mil) 12/2011 = 7453
  2. EBITDA ($mil) 12/2010 = 7076
  3. EBITDA ($mil) 12/2009 = 6008
  1. Cash Flow ($/share) 12/2011 = 7.88
  2. Cash Flow ($/share) 12/2010 = 7.4
  3. Cash Flow ($/share) 12/2009 = 6.31
  1. Sales ($mil) 12/2011 = 29611
  2. Sales ($mil) 12/2010 = 26662
  3. Sales ($mil) 12/2009 = 23123
  1. Annual EPS before NRI 12/2007 = 4.98
  2. Annual EPS before NRI 12/2008 = 5.16
  3. Annual EPS before NRI 12/2009 = 4.69
  4. Annual EPS before NRI 12/2010 = 5.75
  5. Annual EPS before NRI 12/2011 = 5.96

Dividend history

  1. Dividend Yield = 2.83
  2. Dividend Yield 5 Year Average 12/2011 = 2.69
  3. Dividend 5 year Growth 12/2011 = 3.54

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 11.75
  2. 5 Year History EPS Growth 12/2011 = 5.04
  3. ROE 5 Year Average 12/2011 = 29.32
  4. Return on Investment 12/2011 = 20.11
  1. Current Ratio 12/2011 = 2.38
  2. Current Ratio 5 Year Average = 1.97
  3. Quick Ratio = 1.62
  4. Interest Coverage Quarterly = 41.08

Valuation

  1. Book Value Quarterly = 23.92
  2. Price/ Book = 3.49
  3. Price/ Cash Flow = 10.61

Company: Dynex Capital Inc (NYSE:DX)

Growth

  1. Net Income ($mil) 12/2011 = 40
  2. Net Income ($mil) 12/2010 = 29
  3. Net Income ($mil) 12/2009 = 18
  1. EBITDA ($mil) 12/2011 = 72
  2. EBITDA ($mil) 12/2010 = 36
  3. EBITDA ($mil) 12/2009 = 20
  4. Cash Flow ($/share) 12/2011 = 1.79
  5. Cash Flow ($/share) 12/2010 = 1.21
  6. Cash Flow ($/share) 12/2009 = 1.48
  1. Sales ($mil) 12/2011 = 83
  2. Sales ($mil) 12/2010 = 49
  3. Sales ($mil) 12/2009 = 37
  1. Annual EPS before NRI 12/2007 = 0.4
  2. Annual EPS before NRI 12/2008 = 0.91
  3. Annual EPS before NRI 12/2009 = 1.02
  4. Annual EPS before NRI 12/2010 = 1.41
  5. Annual EPS before NRI 12/2011 = 1.03

Dividend history

  1. Dividend Yield = 12.46
  2. Dividend Yield 5 Year Average 12/2011 = 8.5
  3. Dividend 5 year Growth 12/2011 = 38.03

Performance

  1. ROE 5 Year Average 12/2011 = 13.07
  2. Return on Investment 06/2011 = 1.59
  3. Current Ratio 06/2011 = 13.07
  4. Current Ratio 5 Year Average = 72.6
  5. Quick Ratio = 13.07
  6. Cash Ratio = 3.7
  7. Interest Coverage = 2.7

Company: Aluminum Corporation (NYSE:ACH)

Growth

  1. Net Income ($mil) 12/2011 = 37
  2. Net Income ($mil) 12/2010 = 143
  3. Net Income ($mil) 12/2009 = -686
  1. EBITDA ($mil) 12/2011 = N/A
  2. EBITDA ($mil) 12/2010 = 1104
  3. EBITDA ($mil) 12/2009 = 93
  4. Cash Flow ($/share) 12/2011 = N/A
  5. Cash Flow ($/share) 12/2010 = 6.64
  6. Cash Flow ($/share) 12/2009 = 1.8
  1. Sales ($mil) 12/2011 = 22611
  2. Sales ($mil) 12/2010 = 18388
  3. Sales ($mil) 12/2009 = 10302
  1. Annual EPS before NRI 12/2009 = -1.25
  2. Annual EPS before NRI 12/2010 = 0.23
  3. Annual EPS before NRI 12/2011 = 0.08

Dividend history

  1. Dividend Yield = 0.29
  2. Dividend Yield 5 Year Average 12/2011 = 1.18
  3. Dividend 5 year Growth 12/2011 = -55.43

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = N/A
  2. EPS Growth Quarterly(1)/Q(-3) = -177.78
  3. Current Ratio 12/2011 = 0.8
  4. Current Ratio 5 Year Average = 1.07
  5. Quick Ratio = 0.35
  6. Interest Coverage =1.6

Conclusion

The markets should remain in a corrective mode, for the most part, of the second quarter. Long-term investors can use strong pullbacks to slowly start deploying money into long-term investments. Investors looking for other investment ideas might find this article to be of interest - Is It Worth Getting Into General Electric?

Disclaimer

This list of stocks is meant to serve as a starting point. Please do not treat this as a buying list. It is imperative that you do your due diligence and then determine if any of the above plays meet with your risk tolerance levels. The Latin maxim caveat emptor applies - let the buyer beware.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: EPS and Price Vs industry charts obtained from zacks.com. A major portion of the historical data used in this article was obtained from zacks.com. Data for Ycharts sourced from Ycharts.com Option table sourced from yahoo finance. Earnings and Growth estimates data sourced from dailyfinance.com.