CCEP - Coca-Cola Is Overpriced Due Mostly To A 'Berkshire Premium'

• Coca-Cola has a fantastic brand, but 23x+ next year's earnings are stretching it quite a bit. Shares are expensive, in our view.
• Coca-Cola has a number of holdings accounted for under the equity method, but its massive net debt load is greater than the aggregate of these investments' fair value.
• On the basis of our discounted cash flow process, we value shares of Coca-Cola at just $46 each, and that represents what we think is a fair forward multiple of ~17.4x.
• If it weren't for Berkshire Hathaway's 9%+ stake in the name, we would expect shares to fall back down to our fair value estimate in short order. That's probably not going to happen.
• Still, we can't make much sense of Coca-Cola's price at current levels, but the company's dividend yield of 2.9% is nothing to scoff at.

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