Summary
- Coca-Cola's profits remain elevated, although they have stagnated in recent years.
- Public debate towards healthy food continues to be detrimental to the company's long-term future.
- Increasing pressure from environmentalists can cause negative consequences for the company over the long run.
- Investing in Coca-Cola is still a "safe bet" for conservative investors.
- Looking for a community to discuss ideas with? All Weather Fund features a chat room of like-minded investors sharing investing ideas and strategies. Get started today »
No one doubts Coca-Cola's (KO) position as one of the largest and most iconic beverage manufacturers in the world. The company generated $31.9 billion in revenue and $8.7 billion in operating income over the past year. Coca-Cola remains the same solid and steady performer it has always been.
Coca-Cola's consistency is also its biggest problem. The company has not shown any uptick in its sales number, and although it continues selling large amounts of beverages annually, it is not a high-growth company. I believe Coca Cola's shares are expensive based on the current multiples and the headwinds the company faces due to demographic changes. The company's shares could easily be worth $40, approximately 20% less than its current price. This would occur if the earnings multiple decreased only slightly, from a PE of around 31 to 25.
