NYSE:KO
$53.70
(3/16 4:47PM)
+0.1%
| Open | $53.8 |
Mkt Cap | $123.7 Billion |
| High | $83.73 |
52Wk High | $59.45 |
| Low | $53.57 |
52Wk Low | $42.00 |
| Volume | 11.1 Million |
Avg Vol 10D | 12.0 Million |
KO Stock Evaluation
As of the time of this report, there has been relatively little movement in price for KO over the last week. Furthermore, there has been no revision to earnings expectations or guidance. Given these factors as well as those contained in our complete analysis, we do not have enough of a catalyst to necessitate a rating change. For more detail please read the rest of our analysis of KO's valuation.
Recommendation Summary
At Ockham Research, we believe that there is extremely useful information to be gleaned from historical evidence. When a stock is out of line with historical norms it could definitely be a signal that it is overvalued or undervalued. But as proponents of the Efficient Market Hypothesis will tell you, the market is never wrong about stock prices because everything that can be known about a stock has already been priced in. However, in extreme cases, such as the Tech bubble in the early 2000’s or more recently the credit crisis demonstrates there are certainly times where historical evidence can be misleading. Episodes such as this do prove that times of great market correction either positive or negative can be driven by factors outside of fundamentals.
When a sector is as hot as the Consumer Goods sector is right now, we are certainly a little bit more cautious about recommending buying any stocks that have become too expensive. As this NYSE has continued to make gains in the recent weeks and months, we have become more bearish on the whole. However, as of this report we are satisfied to simply reaffirm our Undervalued rating. Please continue reading this report for a full explanation of our reasoning.
First, KO decreased in price by 2.47% since 03/06/2010 and this does not greatly impact our outlook.
Second, since our last report, there have been no significant adjustments in earnings expectations or guidance.
KO Revenue
As a value investing shop, we are interested in seeing how KO's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 5.93x and the low end of the range at 4.22x.
With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for KO of 3.97x is significantly below its average levels historically. In fact, with a current price of $53.35, KO is a full 22% below its average Price to Sales ratio at comparable sales levels. This is a rare occurrence and, when taken in context of the other areas of our analysis, can be a strong positive for our outlook for KO.
KO Cash Earnings
Looking at KO specifically in their Cash Earnings capabilities, Ockham views KO as significantly below its historical average multiple of cash earnings as calculated by Ockham. Similar to our analysis of sales per share, Ockham looks at the last 10 years of cash earnings levels for KO to identify where the current high and low price levels have been historically in relation to profit per share. Again, we utilize a weighted average methodology which relies more heavily on recent years of data. This weighted average framework provides us with an average high Price to Cash Earnings ratio per share of 23.85 and a 16.95 low over the same period.
So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for KO? From the Ockham perspective, we are looking specifically at KO to see if the market is recognizing the huge disparity between KO's past stock price to Cash Earnings ratio to today's levels. At a difference of 26% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at KO. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.
KO Dividends
When determining a company's future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn't imperative for KO to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis.
The estimated annual dividend for KO is $1.76 producing a current dividend yield of 3.30%. Much like our evaluation of Sales and Cash Earnings per share, we review dividend yields from KO against the historic high and low levels over all available dividend history. Because dividends are a decision made exclusively by management, we view a healthy and rising dividend as a sign of confidence and strength. The highest dividend yield from KO over previous years was 4.37% while the lowest dividend yield was 1.16%. If you are looking for some “bang for your buck” then a dividend yield of 19.35% above the historical median should be enticing. KO receives a positive boost in our view because as you know, equity at its core is simply a claim on future dividends.
The Latest News for KO Was Just on Global Connections
The latest news from business television and influential blogs is always available through Ockham's RazorWire, and this news is in relation to Coca-Cola Company.
When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Coca-Cola Company has actually sunk a bit in comparison to the others. At present, Ockham has a valuation stance of Undervalued on KO, as we could see significant price appreciation based on current fundamentals like cash earnings and revenue. Crowd sentiment is favorable on this stock, as measured by the Motley Fool CAPS survey.
“… Things like iron ore, COCA-COLA, others looking very well placed. We are seeing a lot of demand still for steel production. We expect chinese steel production to lift. …”
Check Out Mad Money and News on KO
Staying informed on the news is invaluable for investors, and RazorWire has captured a recently discussion on KO from Mad Money.
When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Coca-Cola Company has actually sunk a bit in comparison to the others. Crowd sentiment is favorable on this stock, as measured by the Motley Fool CAPS survey. At present, Ockham has a valuation stance of Undervalued on KO, as we could see significant price appreciation based on current fundamentals like cash earnings and revenue.
“… To think that last year this week you could have bought ten shares of ford for the price of two tickets to "avatar," a regular diet COKE -- large totally out of the price range, ... …”
Emerging Markets and KO Covered on Fast Money
For growth, there is nowhere growing more rapidly than emerging markets. Recently, Fast Money talked about emerging markets and their impact on Coca-Cola Company.
As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, KO has been less covered in the news compared to the rest of our universe of stocks. The Motley Fool CAPS data suggests that investors believe Coca-Cola Company will beat the market in the foreseeable future. We consider KO as Undervalued at the current price of $53.72. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise.
“… I go back to COKE and coal, metro steel, mtl and russia. These guys have the ability to double their production over the next few years. I do think it's still cheap. > > …”
KO Gets Mentioned in the Financial Media
News has broken via the television and viral blogs regarding KO, so investors should take an interest in learning what was said.
At Ockham, we rank each stock by the amount of news coverage we see from RazorWire news analytics, and Coca-Cola Company has not seen a major ranking change recently. At present, Ockham has a valuation stance of Undervalued on KO, as we could see significant price appreciation based on current fundamentals like cash earnings and revenue. Crowd sentiment is favorable on this stock, as measured by the Motley Fool CAPS survey.
“… But now Medicis we’ve likened, MRX as the Pepsi to Allergan’s COKE, has come out with a new treatment called dysport that aims to give botox a run for its money… Medicis beat ... …”
Squawk On The Street Discussed the Latest Development of Coca-Cola Company
The latest news from business television and influential blogs is always available through Ockham's RazorWire, and this news is in relation to Coca-Cola Company.
Crowd sentiment is favorable on this stock, as measured by the Motley Fool CAPS survey. When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Coca-Cola Company has actually sunk a bit in comparison to the others. At present, Ockham has a valuation stance of Undervalued on KO, as we could see significant price appreciation based on current fundamentals like cash earnings and revenue.
“… It's still -- pepsi is a global play right now and I favor COKE over pepsi only because of the commodity issue with pepsi with their snack business, but, all in all, the beverage ... …”
There is Significant News on KO:Among the Twenty Most Active Stocks in the News
Something important is going on with KO today, as it is getting a lot of attention on business television and influential blogs.
In comparison to the other stocks that we follow, Coca-Cola Company has seen more discussion in relation to its normal ranking among the group. Be aware that the news sources we track are focusing on this stock more often these days. Crowd sentiment is favorable on this stock, as measured by the Motley Fool CAPS survey. At present, Ockham has a valuation stance of Undervalued on KO, as we could see significant price appreciation based on current fundamentals like cash earnings and revenue.
“… But now medicis we've liked, mrx, the pope to allergan's COKE has come out with a new treatment called disport that aims to give botox a run for its money. …”
News Breaking on Coca-Cola Company on Mad Money
Coca-Cola Company is one of the thousands of companies that Ockham has news analytics on, and it was recently discussed on Mad Money.
When looking at our entire coverage universe and ranking stocks by the attention they receive on RazorWire, it is clear that Coca-Cola Company has been talked about more than normal recently. We consider KO as Undervalued at the current price of $53.70. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise. The Motley Fool CAPS data suggests that investors believe Coca-Cola Company will beat the market in the foreseeable future.
“… Did you see how well they did, the COKE snds but there will be fewer bull markets out there. And the s&p 500 taken blindly as a whole could be a dreadful place to be. …”
News Breaking on Coca-Cola Company on Fast Money
The latest news from business television and influential blogs is always available through Ockham's RazorWire, and this news is in relation to Coca-Cola Company.
The Motley Fool CAPS data suggests that investors believe Coca-Cola Company will beat the market in the foreseeable future. We consider KO as Undervalued at the current price of $53.70. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise. When looking at our entire coverage universe and ranking stocks by the attention they receive on RazorWire, it is clear that Coca-Cola Company has been talked about more than normal recently.
“… So I was in stores over the weekend, and COCA-COLA, for example, $1. 58 two liter on sale for 98 cents rolled back, and that's a 90-day rollback. …”
Closing Bell Looked at Coca-Cola Company in Extended Trading
There may be significant news on KO that is causing them to be talked about in after hours trading on Closing Bell.
The Motley Fool CAPS data suggests that investors believe Coca-Cola Company will beat the market in the foreseeable future. When looking at our entire coverage universe and ranking stocks by the attention they receive on RazorWire, it is clear that Coca-Cola Company has been talked about more than normal recently. We consider KO as Undervalued at the current price of $53.65. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise.
“… Pepper, COKE, you name it. Dr. Pepper actually lost a little bit of fizz but drinks boosting consumer staples to the best s&p sector. …”
Holding KO Stock? See What Is Being Discussed on The Razor's Edge
The latest news from business television and influential blogs is always available through Ockham's RazorWire, and this news is in relation to Coca-Cola Company.
Based on our methodology, Coca-Cola Company should hold some appeal to value investors as we view it as Undervalued. Crowd sentiment is leaning to the bearish side, according to the robust data set collected by the Motley Fool CAPS survey. Ranking all stocks in terms of news coverage offers some interesting data. In the case of KO, it is getting significantly more attention in recent news coverage than we are used to seeing.
“… in acquiring the vast majority of their North American bottling operations last August; a move that was later mirrored by their primary competitor COCA-COLA (KO) as they recently ... …”