PEP - The 'Bargain' Window Has Closed But Coca-Cola Still Looks Buyable
2024-07-02 06:20:28 ET
Summary
- Within this analysis, you will find a rationale for KO's attractiveness supported by a series of comparisons between the Enterprise and some of its competitors (incl. PEP and KDP).
- Coca-Cola's stock price has increased ~21.5% since its crash in the second half of 2023. Its EV/EBITDA multiple is significantly higher than its competitors.
- However, I believe the Company has deserved its valuation.
- Despite 0% organic volume growth in NA, KO improved its market position when compared to PEP or KDP, which saw their volumes decline.
- KO's sales growth in North America segment by ~7% in Q1 2024 shows improvement in market position compared to competitors. Its profitability remains outstanding.
Investment thesis
For transparency, let me start with this statement - I own a certain stake in Coca-Cola ( KO ), I don't see a reason to sell it, and I consider adding more. Some investors may be concerned that Coca-Cola's valuation multiples are significantly higher than those of some of its competitors. However, I believe that the business is fairly valued with no reason to drop in value, but there is still some room for potential multiple appreciation....
The 'Bargain' Window Has Closed, But Coca-Cola Still Looks Buyable