New Threads Only:  Add to Google Reader or Homepage
New Threads & Replies:  Add to Google Reader or Homepage
Forums are for serious investors only. GuruFocus Forum Rules.

Forum List » Value Ideas and Strategies
Share and discuss value investing ideas and investing strategies.
New Topic
Goto Thread: PreviousNext
Goto: Forum ListMessage ListNew TopicLog In
Why Coca-Cola Has Upside Potential
Posted by: tyokunbo (IP Logged)
Date: February 21, 2014 11:04AM

Coca-Cola Company (KO) engages in the manufacture of non-alcoholic beverages worldwide. In fact, it is the world’s largest beverage company. It owns and markets more than 500 non-alcoholic beverage brands. Also, it markets four of the world’s top five non-alcoholic sparkling beverage brands. Its finished beverage products bearing its trademark are now sold in more than 200 countries. Of the approximately 57 billion beverage servings of all types consumed worldwide everyday, beverages bearing Coca-Cola's trademark account for more than 1.8 billion servings.

Numbers at a Glance

In its last annual report, Coca-Cola grew its global value share in non-alcoholic beverages for a 26th consecutive quarter. Its volume grew 1% in the fourth quarter and 2% for the full year. It delivered a full-year comparable currency neutral operating income growth of 6%. Coca-Cola also delivered an 8% currency neutral EPS growth in line with its long-term growth targets. Its sparkling brands grew 1%, with brand Coca-Cola adding nearly 100 million unit cases. All of Coca-Cola's billion-dollar sparkling brands except for Diet Coke grew in 2013. They contributed more than 140 million incremental cases in the full year.

Positive Outlook

In fiscal 2014, Coca-Cola expects to accelerate its growth through capital investments in the range of $2.5 billion to $3 billion. It expects share repurchases to be in the range of $2.5 billion to $3 billion. Though the company’s 2014 outlook is below 2013, Coca-Cola's last year’s buybacks represented a 15% increase from the prior year and were funded by cash inflows related to bottling divestitures.

Coca-Cola recently announced a global partnership with Green Mountain Coffee Roasters. It sees Green Mountain (GMCR) as the perfect strategic partner to collaborate with on the many transformative opportunities in the marketplace. The company also evolved five strategic system priorities to accelerate growth.

First, the priorities will accelerate the sparkling growth led by the Coca-Cola brand. Second, it will strategically expand the company’s profitable portfolio. Third, Coca-Cola will increase its media investments by maximizing productivity. Fourth, Coca-Cola plans to win the point of sale by unlocking the power of its system. Five, it plans to invest in its next-generation products.

Head to Head

Coca-Cola competes in the non-alcoholic beverage segment of the commercial beverage industry. Its significant rivals are Dr Pepper Snapple Group Inc. (DPS), Nestle (NSRGY) and Kraft Foods Group (KRFT). In certain markets, Coca-Cola’s competition includes beer companies. Its competitive strength includes a worldwide network of bottlers and distributors of the company’s products. Additionally, it has leading brands with high levels of acceptance for the consumer.

Wings Across the World

While 2013 was a challenging year for Coca-Cola, it has not prevented the company from delivering a long-term sustainable growth in emerging and developed economies.

The North-West Europe market

Its North-West and Nordic business units closed 2013 with 1% volume growth. The development was propelled by Coca-Cola's sales campaign.

India at a Glance

In 2013, the company generated nearly $1.8 billion in revenue from India. It had four of the top five core-sparkling brands and the No. 1 juice drink. Also, India cycled a 16% full-year growth with a 4% volume increase.

China

Coca-Cola drove category excitement in China through campaigns like our Mini-Me Coca-Cola initiative. The campaign contributed to a double-digit immediate consumption growth in the fourth quarter.

Concluding Note

Coca-Cola’s five strategic priorities will enable the company to accelerate its growth in the long term. Its other remarkable advantage is the exciting partnerships to leverage new technologies. This could bring even more shareholder value in the future.

Overall, Coca-Cola has a strong financial position. Also, it has increased its dividend every year for more than 50 years. Therefore, it can be said that this company will provide a pocketful of returns to investors in the near term.



Stocks Discussed: KO, DPS, KRFT, NSRGY, GMCR,
Rate this post:

Rating: 0.0/5 (0 votes)





Sorry, only registered users may post in this forum.

Please Login if you have an account or Create a Free Account if you don't
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK