Stock Analysis & Valuation The Coca-Cola Company (CCC3.DE)

• Previous Close: €62.15
• Sector Valuation Confidence Level: Low

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	46.00	-26
Intrinsic value (DCF)	29.10	-53
Graham-Dodd Method		n/a
Graham Formula	23.10	-63

Strategic Investment Analysis

Company Overview

The Coca-Cola Company (CCC3.DE) is a global leader in the non-alcoholic beverage industry, renowned for its iconic Coca-Cola brand and a diverse portfolio of over 200 brands, including Diet Coke, Sprite, Fanta, and Minute Maid. Headquartered in Atlanta, Georgia, Coca-Cola operates in over 200 countries, leveraging a vast network of independent bottling partners, distributors, and retailers. The company's product range spans sparkling soft drinks, flavored waters, sports drinks, juices, dairy alternatives, teas, coffees, and energy drinks. Coca-Cola's business model focuses on brand strength, global distribution, and strategic partnerships, ensuring market dominance in the consumer defensive sector. With a market capitalization exceeding €272 billion, Coca-Cola remains a cornerstone of stability and growth in the beverage industry, supported by consistent revenue streams and a strong dividend history.

Investment Summary

The Coca-Cola Company presents a compelling investment case due to its strong brand equity, global distribution network, and consistent financial performance. With a beta of 0.474, it offers lower volatility compared to the broader market, making it an attractive defensive stock. The company reported €47.1 billion in revenue and €10.6 billion in net income for the latest fiscal year, with a diluted EPS of €2.46. Coca-Cola's robust operating cash flow of €6.8 billion supports its dividend payout of €1.909 per share, appealing to income-focused investors. However, high total debt of €44.5 billion and capital expenditures of €2.1 billion could pose risks in a rising interest rate environment. Overall, Coca-Cola's market leadership and resilient business model make it a stable long-term investment.

Competitive Analysis

Coca-Cola's competitive advantage lies in its unparalleled brand recognition, extensive global distribution network, and diversified product portfolio. The company's ability to innovate and adapt to changing consumer preferences, such as the shift towards healthier beverages, strengthens its market position. Coca-Cola's strategic partnerships with bottlers and retailers ensure efficient supply chain management and widespread availability. However, the company faces intense competition from both traditional rivals and emerging health-focused brands. While Coca-Cola dominates the sparkling soft drink segment, competitors are gaining traction in niche categories like energy drinks and plant-based beverages. The company's scale and marketing prowess provide a significant edge, but maintaining growth in saturated markets remains a challenge. Coca-Cola's focus on sustainability and digital transformation further enhances its competitive positioning, ensuring long-term relevance in the evolving beverage landscape.

Major Competitors

• PepsiCo, Inc. (PEP): PepsiCo is Coca-Cola's primary competitor, with a strong portfolio including Pepsi, Mountain Dew, and Gatorade. PepsiCo's diversified business, which includes snacks (Frito-Lay), gives it an edge in bundled offerings. However, Coca-Cola's stronger global brand recognition and focus on beverages provide a competitive advantage in international markets.
• Keurig Dr Pepper Inc. (KDP): Keurig Dr Pepper competes in the soft drink and coffee segments, with brands like Dr Pepper and Snapple. Its strength lies in the US market, but it lacks Coca-Cola's global reach. The company's focus on coffee and cold beverages presents a niche challenge, though it trails in overall market share.
• Monster Beverage Corporation (MNST): Monster Beverage is a leader in the energy drink segment, posing a threat to Coca-Cola's emerging energy brands. Its innovative marketing and strong youth appeal differentiate it, but it lacks Coca-Cola's diversified portfolio and global distribution network.
• Danone S.A. (DPS.AS): Danone competes in the health-focused beverage segment, particularly in dairy and plant-based drinks. Its emphasis on sustainability and wellness appeals to health-conscious consumers, but it lacks Coca-Cola's scale and brand dominance in traditional soft drinks.
• Nestlé S.A. (NESN.SW): Nestlé competes in bottled water, coffee, and health beverages, with brands like Perrier and Nescafé. Its global presence and R&D capabilities are strengths, but it trails Coca-Cola in the sparkling soft drink market. Nestlé's focus on nutrition aligns with trends but limits its direct competition with Coca-Cola's core products.