The Coca – Cola Company - Optimal Resume ABSTRACT$ The!Coca–ColaCompanyanalysisfocusingontheindustry,sector,qualitativeand! ... The Coca-Cola Company competes within the beverage

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The Coca – Cola Company Company Analysis

Nicholas Brunner

ABSTRACT

The Coca – Cola Company analysis focusing on the industry, sector, qualitative and quantitative analysis, including a stock recommendation.

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Table of Contents Preface .................................................................................................................................3

Chapter I – Sector and Industry Analysis ............................................................................4

Section I – A Sector Analysis ...................................................................................................... 4

Section I – B Industry Analysis ................................................................................................... 6

Soda Production within the United States..........................................................................................6

Juice Production within the United States .........................................................................................7

Bottled Water Production within the United States ...........................................................................8

Chapter II – Qualitative Analysis for the Firm ....................................................................9 Content 2020 ......................................................................................................................................9

Market Share ....................................................................................................................................10 Horizontal Integration ......................................................................................................................11

Product and International Diversification ........................................................................................11 Chapter III – Quantitative Analysis of the Firm ................................................................12

Section III – A Financial Ratios ................................................................................................ 12

Liquidity Ratios................................................................................................................................12

Asset Utilization Ratios ...................................................................................................................12

Debt Ratios.......................................................................................................................................13

Profitability Ratios ...........................................................................................................................13 Section III – B Price Ratios........................................................................................................ 14

Chapter IV – Recommendation .........................................................................................14

Section IV – A Technical Analysis ........................................................................................... 14

50 Day and 200 Day Moving Average ............................................................................................14

Bollinger Bands................................................................................................................................15

Resistance Level ..............................................................................................................................16

Volume.............................................................................................................................................17

Section IV – B Final Recommendation ..................................................................................... 18

CAPM Model ...................................................................................................................................18

Summarization and Recommendation .............................................................................................18

Works Cited ...........................................................................................................................

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Preface The Coca-Cola Company is a beverage company that manufactures, markets and

sells nonalcoholic beverage concentrates, syrups, and ready-to-drink beverages worldwide.

Founded in 1886 when John Stith Pemberton invented the Coca-Cola formula and sold the

formula to Asa Candler who incorporated the Coca-Cola Company in 1892. The Coca-Cola

Company is headquartered in Atlanta, Georgia and generates sales from over 200 countries.

The Coca-Cola Company is a large component of the consumer staple sector. The

consumer staple sector is composed of consumer products such as food, drug retailing,

beverages, tobacco, household products, and personal products.

The Coca-Cola Company’s products include carbonated non-alcoholic beverages,

energy drinks, sports drinks, purified water, juice, ready-to-drink coffee and ready-to-drink

tea. With the acquisition of Coca-Cola Enterprises’ North American division in 2010, the

Coca-Cola Company shifted focus from a producer of syrups to controlling the production,

bottling and distribution of beverages. The Coca-Cola Company owns sixty-nine beverage

production facilities, ten beverage concentrate/syrup manufacturing plants, two bottled

water facilities and one juice concentrate facility within North America. Bottling and

distribution of Coca-Cola products outside of North America is handed by independent

Coca-Cola affiliates, with the largest being Coca-Cola Enterprises. Coca-Cola beverage

products are sold under 500 different brands, most notably Coca-Cola, Diet Coke, Fanta,

Sprite, Dasani, Minute Maid, Powerade, Simply, NOS, Honest Tea, Nestea, and Georgia.

Coca-Cola’s top competitors are Dr. Pepper Snapple Group Inc. (DPS), Nestlé

(NSRGY), and Pepsico Inc. (PEP). Dr. Pepper Snapple Group Inc. primarily

manufactures syrups and concentrates for nonalcoholic beverages under the brands Dr.

Pepper, Crush, Canada Dry, Sunkist, Hawaiian Punch, Snapple, AriZona, and Yoo-Hoo.

Nestlé manufactures and sells nutrition and wellness products worldwide. Beverages in

direct competition to Coca-Cola products are, Nestlé Pure Life, Poland Spring, Perrier,

Juicy Juice, Milo, and Nesquick. Pepsico manufactures and sells snacks, carbonated and

non-carbonated beverages. Beverages in competition to Coca-Cola include Pepsi,

Gatorade, Mountain Dew, Diet Pepsi, Aquafina, and Sierra Mist.

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Chapter I – Sector and Industry Analysis

Section I – A Sector Analysis The Coca – Cola Company is one of the largest companies in the consumer

staples sector. The consumer staples sector, as described by Select Sector SPDRs, is

composed of “companies primarily involved in the development and production of

consumer products that cover food and drug retailing, beverages, food products, tobacco,

household products and personal products” Below are returns of all sectors within the last

ten years.

Source: Select Sector SPDRs

As you can see in the above chart the consumer staples sector has been one

of the most stable sectors of the market. In the downturn of 2008 – 2009 the

consumer staple sector returned the smallest loss; the consumer staple sector lost

9.49% while the S&P 500 lost 25.49%. Key statistics of the consumer staples

sector spdr etf (XLP) are below.

As you can see to

the left, the beta of

XLP is 0.50. Thus

the risk of the

consumer staples

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sector relative to the market is low. The low risk of the sector was seen by the

minimized loss in 2008-2009. If investors are pessimistic about the overall market,

the consumer staples sector is a valuable safe option since the sector minimizes

losses while still allowing for growth.

Recently, the consumer staples sector has experienced some of the fastest

growth. Below are the recent returns of the consumer staples sector spdr etf (XLP)

compared to other sectors.

Source: Select Sector SPDRs

As seen above, the consumer staples sector has experienced the highest

growth than any other sector for the last month, quarter, and calendar YTD as of

2/28/13. With high recent growth and a low beta, the consumer staples sector is a

viable option for investment.

Select Sector Latest

Calendar One Annualized

SPDR Fund Quarter YTD Year Three Five Ten Since

One

Month Year Year Year Inception* Materials (XLB) -1.46% 2.46% 2.46% 6.36% 9.74% 1.33% 10.23% 6.96% Health Care (XLV) 1.27% 8.78% 8.78% 22.42% 13.66% 7.93% 7.06% 5.63% Cons Stap (XLP) 3.27% 9.20% 9.20% 18.11% 15.38% 10.01% 9.93% 4.82% Cons Disc (XLY) 1.13% 6.86% 6.86% 19.18% 20.29% 12.04% 9.98% 6.40% Energy (XLE) 0.86% 9.18% 9.18% 6.03% 13.49% 2.17% 15.08% 10.52% Financials (XLF) 1.24% 7.27% 7.27% 21.49% 7.81% -5.32% 0.45% 0.41% Industrials (XLI) 2.33% 8.16% 8.16% 12.66% 14.81% 4.80% 9.99% 6.08% Technology (XLK) 0.88% 2.51% 2.51% 4.19% 12.72% 7.52% 8.76% 0.79% Utilities (XLU) 2.21% 7.14% 7.14% 11.60% 13.23% 3.97% 11.75% 5.51%

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Section I – B Industry Analysis

The Coca-Cola Company competes within the beverage industry, but more

specifically the soda production, juice production, and bottled water production

industries. This industry analysis focuses on the United States market and does not

consider Coca-Cola’s worldwide distribution system and emerging market growth

opportunities. The data and outlook for the following industry analyses was found on

IBISworld.

Soda Production The soda production industry within the United States is composed of firms that

produce soda by blending various ingredients with carbonated water, package and

distribute these beverages for resale. The soda production industry does not include still

beverages, carbonated water, and functional beverages such as energy drinks. The major

competitors within the industry are The Coca-Cola Company, PepsiCo Inc, and Dr.

Pepper Snapple Group Inc; these top competitors control 65.4% of the market.

The soda production industry within the United States is currently in the decline

stage of the industry life cycle. Per capita soda consumption has been declining since

2004 and is expected to continue to decline as consumers within the United States

increase their concerns over health. As a result the soda production industry is projected

to contract over the next ten years at an annualized rate of 1.4%. There has been some

growth within the industry with new product introductions such as dry soda, but the

growth resulting from new products is not projected to outpace the decline in consumer

consumption. Consolidation within the soda production industry is projected to continue

as the largest firms compete to maintain market share as revenue is expected to decline.

The soda production industry within the United States has a high level of

competition. Competition is expected to increase over the next five years due to new

entrants into the industry and price pressure from the large competitors as they capitalize

on their efficiencies from consolidation. Established competitors in the industry have a

competitive advantage due to the range of products they offer. As consumer preferences

change, the large established competitors will be in a more advantageous position in

comparison to the newer smaller niche firms. Despite elastic prices within the industry,

established firms are able to markup up prices as they capitalize on product

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differentiation through brand loyalty and packaging design. The large competitors invest

heavily in advertising and marketing to create brand loyalty amongst consumers. As a

percentage of total revenue, advertising and marketing within the soda production

industry is three times more expensive than the average industry sector. Advertising and

marketing is expected to increase as firms try to stimulate demand for soda products.

Increased marketing expenses and declining revenue will lower profits over the next ten

years.

The soda production industry also experiences high external competition through

increased substitute products. Substitutes for soda include beer, wine, coffee, tea, juice,

and energy drinks. Over the last five years the juice production industry has reduced the

soda production revenue by providing consumers with direct substitutes for soda. These

substitutes are in line with the consumers’ interest in healthier alternatives. The

competition between the two industries is projected to increase. In addition to the juice

substitutes, companies such as Starbucks have introduced more convenient in home

methods of coffee and tea consumption. Overall, external competition with the soda

production industry is expected to increase.

High barriers to entry due to market saturation and regulation risks also

characterize the soda production industry. The soda production industry is currently at

risk of new labeling requirements by the FDA and higher sales tax on drinks that contain

large amounts of caffeine and sugar. Firms within the industry are also at risk of rising

commodity prices, specifically sugar, cocoa, aluminum and plastic.

Juice Production

The juice production industry is composed of firms that manufacture fruit juices,

functional drinks such as sports and energy drinks, ready-to-drink coffee and tea. The

industry does not include carbonated soda and unflavored water. The major competitors

within the industry are PepsiCo Inc, The Coca-Cola Company and Dr. Pepper Snapple

Group Inc. These top competitors combine for 68.1% of the market.

The juice production industry has experienced rapid growth within the last five

years and is in the growth stage of the industry life cycle. Growth of the industry is

expected to continue at an annualized rate of 6.8%, outpacing the economy. The growth

is a result of increased consumer disposable income. Impulse purchases and willingness

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to purchase more expensive alternatives to carbonated drinks are expected to increase

with disposable income. In addition, consumer’s increasing awareness to health concerns

will boost industry revenue.

Internal competition within the juice production industry is high and increasing.

Due to new and changing products, competitors must quickly react to new consumer

preferences. Product differentiation is possible through brand loyalty, price and

ingredients. Marketing and advertising is used extensively throughout the industry as

competitors attempt to build brand loyalty amongst consumers. Competitors attempt to

differentiate through unique products and flavors. Yet, differentiation is quite difficult

since competitors react quickly to market trends. External competition has been declining

as soda consumption has weakened and lower disposable income decreased consumption

within the bottled water industry the most.

The main risk to the juice production industry is the threat of increased regulation.

Regulation of marketing has been increasing within the industry in addition to public

scrutiny following the high levels of arsenic found in apple and grape juice. Other threats

to the industry are volatile and increasing input prices.

Barriers to entry within the industry are medium, as production costs and the

initial investment are high. Yet there is opportunity for niche competitors within local

markets. Consolidation within the industry is expected to increase as the major

competitors seek to capitalize on the industries’ high growth.

Bottled Water Production The bottled water production industry is composed of firms that fill bottles with

purified water. The major competitors within the industry are Nestle, The Coca-Cola

Company, and PepsiCo Inc. These top competitors combine for 86.6% of the market.

The bottled water industry is currently in the maturity stage of the industry life

cycle. Despite expected annualized growth of 2.1% to 2017, the industry’s industry value

added is expected to decline as the economy grows faster than the industry. The decline

in industry value added is a result of increased automation of production and not a

decrease in bottled water consumption. Consumer consumption is expected to increase

with an increase in disposable income as consumers recover from the economic

downturn.

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Competition within the bottled water industry is high. Firms within the industry

compete on price and brand loyalty. Consumers tend to like a consistent taste to water,

thus firms compete to match consistency within their products to earn brand loyalty.

External competition with the bottled water industry is also high. Despite the decline in

consumer consumption of carbonated soft drinks, juice consumption and consumption of

direct substitutes to bottled water have increased. As consumer disposable income

declined, consumers turned to alternatives such as tap water and filtered water products.

The bottled water industry is at the risk of increasing plastic prices, increased

consumer concern for environmental issues, and increased regulation by the EPA and

FDA. The bottled water industry has high barriers to entry due to water regulation,

technological change, and consumer brand loyalty.

Chapter II – Qualitative Analysis for the Firm

Content 2020 The Coca-Cola Company has announced a revolutionary marketing strategy with

the goal of doubling the size of the company by 2020 as seen in prizi presentation posted

on Youtube. The plan of content 2020 is to utilize content marketing and engage

consumers in a more dynamic fashion. Content 2020 focuses on two main concepts,

liquid and linked. Liquid refers to marketing content that makes the consumer want to

send the content to others. Coca-Cola plans on creating content so remarkable that

consumers can’t wait to share the content with more people. Linked refers to the content

remaining close to the underlying business goals of the organization. Through liquid and

linked marketing, Coca-Cola believes they will be able to increase brand loyalty and thus

drive consumer consumption of their products.

Another key aspect of content 2020 is the 70/20/10 plan. The 70/20/10 plan is an

idea of how to divide their marketing budget into different marketing concepts. Seventy

percent of Coca-Cola’s budget will be utilized for low risk, historically effective content.

Twenty percent will be utilized for spin off material that is more detailed. The final ten

percent will be used for high-risk content that is revolutionary and could have

tremendous rewards or fail to be effective.

The goal of content 2020 is to double the size of the Coca-Cola Company by

increasing brand loyalty through content marketing. Content 2020 shows an initiative by

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the management of Coca-Cola to focus on future growth potential while not jeopardizing

current strengths of the firm. It is to early to tell if content 2020 will translate into higher

sales, but the project at least shows that management is focused on long run growth and

not just short-term profits.

Market Share One of the strongest assets of the Coca-Cola Company is the company’s market

share of the soda production, bottled water production and juice production industries.

The Coca-Cola Company’s market share of these three industries can be seen in the

charts below.

The Coca-Cola Company currently holds a 32.7% market share of the soda

production industry, 21.6% market share of the bottled water production industry and

26.8% market share of the juice production industry. The Coca-Cola Company’s large

market share allows the company to earn above average returns within each industry. The

large market share is attributed to strong brand loyalty amongst consumers, efficiencies

developed within the production process, and strong product placement. Although the

soda production industry within the United States is projected to contract in the future,

the large market share will allow the Coca-Cola Company to generate profits within the

industry and invest within the expanding juice production industry. In addition to

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investing in emerging markets such as the BRIC nations and others in which soda, juice

and bottled water consumption is growing faster than the United States.

Horizontal Integration In 2010 the Coca-Cola Company purchased the North American operations of the

largest Coca-Cola bottling company, Coca-Cola Enterprises as reported by Burritt and

Stanford of Bloomberg. The purchase was shortly after PepsiCo Inc purchased a portion

of bottling operations from one of their largest bottling companies. The purchase by

Coca-Cola was driven by the intent to lower costs by bringing the bottling operations in

house. Although the purchase may result in lower costs and higher profits, the move does

not come without integration risks. The Coca-Cola Company is now more invested in the

beverage industry within the United States, thus an exit due to lower than anticipated

demand will be more costly.

Product and International Diversification The Coca-Cola Company is quite diversified within the beverage industry and

globally. Coca-Cola products are consumed within over 200 countries as reported by

Morningstar. Thus, the Coca-Cola Company is not dependent upon any one particular

country or region. This reduces the company’s risk to country specific recessions and

slow growth. Coca-Cola is building brand loyalty within emerging markets which will

likely lead to increased growth over the future. Specifically, Coca-Cola plans on

investing five million dollars in India within the next seven years as reported by Gulati

and Ahmed of the Wall Street Journal.

The Coca-Cola Company owns over 500 different brands as noted on the Coca-

Cola Company official website. These products include classic Coca-Cola soda, Georgia

ready to drink chilled coffee, DASANI bottled water, Bacardi Mixers, Vitaminwater, Full

Throttle energy drinks and Simply Orange juice. Diversification of products allows the

firm to position themselves for continued growth. As one industry may diminish, such as

the soda industry within the United States, another industry may growth quickly, such as

the juice industry.

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Chapter III – Quantitative Analysis of the Firm

Section III – A

Liquidity

Ticker Company Name Current Ratio Quick Ratio Net Working Capital to Assets

DPS Dr. Pepper Snapple Group Inc

1.10 0.80 0.012

KO The Coca-‐Cola Company 1.10 0.80 0.047 NSRGY Nestle 0.90 0.60 -‐0.014 PEP Pepsico Inc 1.10 0.80 0.022

Source: Yahoo! Finance & Bloomberg Businessweek Liquidity ratios express a firm’s ability to pay off liabilities within a short time

period. The Coca-Cola Company’s liquidity ratios are very similar to their competitors.

No company within the industry has a strong advantage of liquidity, but Nestle is at a

disadvantage. Nestle has a current and quick ratio less than one. Thus, Nestle is not able

to meet their current obligations with their current assets. The difference in liquidity

ratios between Nestle and the competition may have to do with the broader industries

Nestle competes in as compared to Dr. Pepper Snapple Group, The Coca-Cola Company

and PepsiCo Inc.. The Coca-Cola Company does have a higher Net Working Capital to

Asset ratio than their competitors.

Asset Utilization

Ticker Company Name Receivables Turnover

Inventory Turnover

Fixed-‐Asset Turnover

Total Asset Turnover


10.50 12.20 5.10 0.70

KO The Coca-‐Cola Company 9.90 6.00 3.30 0.60 NSRGY Nestle 9.50 5.30 3.60 0.80 PEP Pepsico Inc 11.00 8.40 3.40 0.90 Source: Yahoo! Finance & Bloomberg Businessweek

Asset Utilization ratios examine a firm’s efficiency. The Coca-Cola Company’s

asset utilization ratios are within the range of their competitors. The Coca-Cola Company

has a low inventory turnover as compared to its competitors. Although the Coca-Cola

Company is not the lowest, this could be problematic since it indicates a slower

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replacement of inventory due to either lower sales or high inventory levels. Dr. Pepper

Snapple Group Inc. has a large advantage as compared to its competitors in inventory

turnover and fixed-asset turnover. Overall, the firms within the industry are within line to

one another.

Debt Utilization

Ticker Company Name Total Debt to Equity

Total Liabilities to Total Assets

Times Interest Earned


123.00 74.50 N/A

KO The Coca-‐Cola Company 98.30 61.50 30.75 NSRGY Nestle 44.50 50.40 23.48 PEP Pepsico Inc 126.60 70.00 10.24

Source: Yahoo! Finance & Bloomberg Businessweek

The Coca-Cola Company is within the range of their competitors in regard to debt

utilization ratios. The Coca-Cola Company is on the lower end of the Liabilities to Asset

ratio, which indicates that the Coca-Cola Company has fewer liabilities to assets in

comparison to their competitors. This places Coca-Cola at an advantage as they have

lower debt levels in comparison. The Coca-Cola Company has an AA- credit rating as

reported by Morningstar. The high credit rating reiterates the Coca-Cola Companies

strong financial position. Nestle’s Total Debt to Equity ratio is concerning, since the low

ratio signifies a large amount of equity as compared to competitors. This could be a drag

on retained earnings since equity is more expensive for a company than debt.

Profitability

Ticker Company Name Gross Profit Margin

ROA ROE


58.30% 7.50% 27.69%

KO The Coca-‐Cola Company 60.32% 8.44% 27.92% NSRGY Nestle 47.58% 7.51% 18.30% PEP Pepsico Inc 52.22% 7.97% 28.70%

Source: Yahoo! Finance & Bloomberg Businessweek

The Coca-Cola Company has an advantage of higher profitability ratios than their

competitors. The Coca-Cola Company has the highest gross profit margin, ROA and

second highest ROE. Although the differences are not significant, the higher profitability

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ratios indicate higher sales revenue and cost control. Higher sales may be due to Coca-

Cola’s ability to price their products higher than the competition due to strong brand

loyalty within the soda industry. Cost control is a initiative of the company as seen by the

acquisition of the North American bottling operations in order to lower production costs.

Section III – B

Ticker Company Name Trailing P/E

Forward P/E

Price/Sales per share

Price/Book Value per share

PEG


15.71 14.01 1.57 4.17 2.60

KO The Coca-‐Cola Company 20.58 17.40 3.73 5.47 2.11 NSRGY Nestle 20.57 17.42 2.37 3.60 3.85 PEP Pepsico Inc 20.27 16.67 1.86 5.44 2.48 Source: Yahoo! Finance & Bloomberg Businessweek

The Coca-Cola Company has a high price/sales per share ratio and a low PEG

ratio as compared to its competitors. The higher price/sales per share ratio is concerning

but the low PEG ratio indicates that the company is less expensive in comparison to its

growth rate than the competition. The main concern within the price ratios is the trailing

and forward P/E. All of the companies above have a lower forward P/E ratio as compared

to the trailing P/E ratio. This indicates that analysts predict slowed growth for the entire

beverage industry. In addition, the Coca-Cola Company, Nestle and PepsiCo Inc all have

trailing P/E ratios higher than the overall market. The high P/E ratio is likely a direct

result of the recent high growth within the consumer staples sector and juice production

industry.

Chapter IV – Recommendation

Section IV – A Technical Analysis

50 and 200 Day Moving Average

As seen in the one-year chart with the 50-day and 200-day moving average below,

Coca-Cola is currently appreciating in value. The 50-day average is above the 200-day

average, indicating that the value of the Coca-Cola Company stock is increasing. This is a

bullish indicator, as the buy signal was within the last month.

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Source: Yahoo! Finance

Bollinger Bands Bollinger Bands measure the moving average of the stock price and set an upper

band and lower band two standard deviations away from the average. Technical analysis

through the use of Bollinger Bands indicates that the Coca-Cola Company is a slight sell

as the stock is closer to the upper band than the lower. The analysis can be seen in the

charts below.


Seen above the Coca-Cola Company recently broke the upper band indicating a

sell signal. Within the last few weeks, the stock has fallen and recovered, moving towards

the middle of the Bollinger Band.

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Above is a closer examination of the Coca-Cola Company through the use of

Bollinger Bands. The recent sell signal can be seen shortly after March 22, when the

stock price exceeded two standard deviations of the moving average.

Resistance Upon analysis of the 1-month price movement of the Coca-Cola Company, a

resistance level can be found. During the recent upward movement, the stock peaked at

$40.69 on March 26, which was the sell signal through the use of the Bollinger Band.

Since the peak, the stock fell to $40.22 and slowly rose to a second peak slightly above

the previous at $40.71. The stock has since fallen and is now appreciating towards the

resistance level. If the stock is able to break the resistance level look for the volume to

increase and the stock price to quickly appreciate.

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Volume

The amount of trading volume can often be an indicator of the investor’s outlook.

During the recent upward movement of the price of KO, the volume of trades only broke

the moving average twice, and within the last two weeks the trading volume has been

slowly declining. This is not a positive indicator for future price appreciation.


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Section IV - B

CAPM Model

Required Return = Risk Free Rate + Beta (Expected Market Return – Risk Free Rate)

RR = 1.69% + 0.37 (11% - 1.69%)

RR = 1.69% + 3.4447%

RR = 5.1347%

Given the low yield on the 10-year Treasury bill and Coca-Cola’s low beta, the

required return is annualized rate of just 5.1347%.

Summarization and Recommendation

The Coca-Cola Company is a part of the consumer staples sector. The consumer

staples sector is a lower risk sector since growth is lower and more consistent. This

means that the consumer staples sector is more adequate for conservative investment. Yet

recently, the consumer staples sector has returned the highest growth within the last

quarter, month and YTD as of February 28, 2013.

The Coca-Cola Company competes within the beverage industry. More specially,

Coca-Cola competes within the soda production, juice production and bottled water

production industries. Within the United States, the soda production industry is expected

to contract. Despite the contraction, the Coca-Cola Company’s large market share will

allow the company to use profits to invest in the booming juice production industry. In

addition, the Coca-Cola Company is focused on long term growth through content

marketing and investment within emerging markets. The Coca-Cola Company’s 500 plus

brands within over 200 countries provides the company with sufficient diversification to

sustain growth and minimize exposure to region specific economic downturns.

The Coca-Cola Company has a strong financial position and strong quantitative

ratios as compared to its competitors. Coca-Cola’s strength is their profitability ratios.

The Coca-Cola Company has the highest gross margin, ROA and second highest ROE.

The firm is in a strong position to pay current liabilities and has a high quality credit

rating. The cause for concern is the Coca-Cola’s growth rate as predicted by analysts. The

trailing P/E ratio is higher than the forward P/E; meaning future growth is expected to be

less than previous growth. In addition, the Coca-Cola Company’s trailing P/E ratio is

higher than the overall market.

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Technical analysis of the Coca-Cola Company shows that the firm has recently

been appreciating. Short-term future appreciation is questionable as the stock seems to

have hit a resistance point at $40.71 and volume has not been increasing despite recent

appreciation.

With a low required return of 5.1347%, future growth potential within the juice

production industry in the US, investment within emerging markets, and management’s

focus on long run growth, the Coca-Cola Company is a good long-term, conservative

investment. The Coca-Cola Company’s strong market share and profitability will benefit

investors with dividends and potential growth through funding expansion of their market

share within growing industries. The Coca-Cola Company should be bought for safety of

principal and income. The Coca-Cola Company issues a current dividend of 1.12

resulting in a dividend yield of 2.7%. In addition, the Coca-Cola Company has a low beta

since the company has high diversification and market share within established profitable

industries. The Coca-Company should be considered as a portfolio anchor within the

volatile equity market.

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The Coca – Cola Company - Optimal Resume ABSTRACT$ The!Coca–ColaCompanyanalysisfocusingontheindustry,sector,qualitativeand! ... The Coca-Cola Company competes within the beverage

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