There is only one answer on question stated in headline – obviously he is! It is one of his biggest investments and he earned lots of money on it. So why am I stating this question? Well, look at share price – it is the same as peak in 2014. In long term growing business it might means that valuation is way more attractive now, than it was in 2014. Let’s have a closer look.

 

From wide perspective:

EV/EBITDA ~ 16-17

P/E ~22

Dividend yield ~3.3% + buyback ~1% annually.

It is still expensive, only dividend yield is quite decent. Let’s look more in details:

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We can see that outlook for FY 2016 has not change a lot during Q3 results presentation. Company is growing on top line organically by around 3%. On bottom line there is higher profit and lower EPS. Well, nothing special for me…

Also in long term company is market leader and there is not so much space to grow. I do not expect for KO to grow faster than 10%. On the other hand it is time which creates long term value…

Coming back to my headline question, probably you heard that Warren said that he will never sell a share of Coke stock (if no, then watch it). I am wondering then, why is that so? He is well known for having not only great selection skills but also timing. Then as rational successful investor is he thinking that in long term share price will only go up and up? If no then he should sell and try to buy back cheaper…

 

What do you think?

 

For me there is no story to buy currently. I know KO is a great business but there are also other great businesses which are cheaper/growing faster…

 

Disclaimer – KO no position