It is hard to grow when you are leader. Nevertheless with high quality companies like Coca-Cola it is possible. Just look on Q2 results:

  • Reported net revenues declined 5% and organic revenues grew 3% in the quarter.
  • Reported EPS was $0.79 and comparable EPS was $0.60 in the quarter.
  • Global volume grew 1% year to date and was even in the quarter.
  • Global price/mix grew 3% in the quarter, reflecting continued effective pricing and packaging initiatives across key markets.
  • Reported operating margin expanded more than 390 basis points and comparable currency neutral operating margin expanded more than 140 basis points.

Results were strong again. It is incredible how company is able to increase margins. On the other hand if we look that comparable EPS is down 4 to 7% It is rather a weak info.

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In my opinion it is strange that with declining comparable EPS share price is YTD +4%, especially if you take into consideration that valuation is very high:

EV/EBITDA ~17.8

P/E ~23

Dividend yield is slightly above 3%, which is a decent result, but it should be noted that buyback is only around $1b for IH 2016, so assuming $2b for whole year it is around 2%. Altogether 5% return rate – not bad, but I expect something more from my investments.

 

Summing up, valuation is high, dividend yield is ok (but nothing special). Could you explain me briefly why should I buy shares now? I see no reason…

 

Disclaimer – KO no position