Coca-Cola Company powerpoint

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Coca-Cola Company powerpoint

  1. 1. The Coca-Cola Company<br />(KO)<br />Brad Schwer<br />
  2. 2. Recommendation: Buy<br />Estimated Value: $58.31-$59.31<br />Current Price: $54.95<br />Sector: Consumer StaplesIndustry: Soft Drinks<br />
  3. 3. Company Information<br />Fiscal year ends 12/31<br />Non-alcoholic <br />Carbonated and non-carbonated beverages<br />Headquarters in Atlanta, GA<br />Focus is on the syrup for beverages<br />Sold to bottlers, distributors, and fountain retailers<br />
  4. 4. Familiar Products<br />Coke/ Diet Coke<br />Dasani (bottled water)<br />Sprite<br />Fanta<br />Vault (energy drink)<br />Powerade<br />
  5. 5. Coca-Cola: Buy<br />Source: Edward Jones<br />
  6. 6. Sales and EPS Growth<br /><ul><li>5-year compound growth rate in sales: 7.0%
  7. 7. 5-year compound growth rate in EPS: 8.0%</li></li></ul><li>SWOT Analysis<br />
  8. 8. SWOT Analysis<br />
  9. 9. Value Line Projections<br />11.5% Yr to Yr Gain<br />Baseline Projections<br />12% Yr to Yr Gain<br />
  10. 10. Value Line Projections<br />7% Yr to Yr Gain<br />Baseline Projections<br />7% Yr to Yr Gain<br />
  11. 11. P/E Valuation<br />Average Forward P/E for S&P 500: 14.5 <br />
  12. 12. P/E Valuation<br />5-year average P/E: 18<br />Forward P/E: 16<br />Averaged P/E multiple: 17x<br />Estimated projection: 17*$3.43<br /><ul><li>$58.31 per share</li></li></ul><li>DCF Input Data<br />
  13. 13. Valuation<br />DCF intrinsic value: $59.31<br />P/E valuation: $58.31<br />Valuation range<br /><ul><li>$58.31-$59.31</li></ul>Current stock price<br /><ul><li>$54.95 (Undervalued)</li></li></ul><li>Recommendation: Buy<br />Estimated Value: $58.31-$59.31<br />Current Price: $54.95<br />
  14. 14. Questions from the Board of Directors?<br />
  15. 15. Appendix<br />
  16. 16. Coca-Cola vs. PepsiCo (6-month)<br />
  17. 17. Against the S&P 500 (6-month)<br />
  18. 18. Foreign Currency Exposure<br />Coca-Cola <br />PepsiCo<br />Generated 74% of net operating revenue from outside U.S. <br />Uses 72 functional currencies<br />Currency impact on net revenue<br /><ul><li>2009: -11%</li></ul>Uses derivatives to hedge<br /><ul><li>Forward contracts
  19. 19. Purchase currency options</li></ul>Generated 48% of net operating revenue from outside U.S.<br />Currency impact on net revenue<br /><ul><li>2009: -5%</li></ul>Uses derivatives to hedge<br /><ul><li>Forward contracts
  20. 20. Commodity contracts</li></li></ul><li>Acquisition<br />Announced acquisition of North-American operations of Coca-Cola Enterprises (CCE)<br /><ul><li>75% of CCE’s volume</li></ul>$12.9 billion of equity and debt<br />Synergies of $350 million over 4 years<br />Assume $8.8 billion in debt<br />KO sells Norwegian and Swiss bottling operations to CCE for $822 million<br />

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