Assets Structure Analysis
The Coca-Cola Company’s total assets were $97.7 billion and $92.8 billion as of December 31, 2023 and December 31, 2022, respectively.
There is a diversified assets structure.
Equity method investment were $19.7 billion as of December 31, 2023, accounting for 20% of total assets.
Other noncurrent assets were $7.2 billion as of December 31, 2023, consisting of 7.4% of total assets.
Property, plant and equipment, net were $9.2 billion as of December 31, 2023, making up 9.4% of total assets.
Trademarks with indefinite lives were $14.35 billion as of December 31, 2023, comprising 14.7% of total assets.
The 14.7% is very high ratio, which mean that trademarks is very important for the company.
Goodwill was $18.36 billon, as of December 31, 2023, accounting for 18.8%, mirroring the company’s acquiring strategy.
Total current assets were $26.7 billion at December 31, 2023, consisting of 27.3% of total assets.
The Coca-Cola Company had total cash, cash equivalents and short-term investment of $12.4 billion as of December 31, 2023, making up 12.7% of total assets.
Liquidity and Solvency
Total current liabilities were $23.6 billion as of December 31, 2023.
The current ratio was 1.13.
Trade accounts receivable were $3.4 billion, inventories were $4.4 billion and accounts payable were $15.5 billion as of December 31, 2023.
The combined amount of trade accounts receivable and inventory is smaller than the amount of accounts payable, which illuminate that the speed of paying to suppliers is more slowly, or the suppliers believe that the company’s reputation is pretty good.
Total liabilities were $70.2 billion as of December 31, 2023.
The debt ratio was 71.9%.
Actually, given that assets structure, the debt ratio is very high.
The debt ratio is very high with strong cash flow, so you don’t worry about debt.
Profitability Analysis
Net operating revenues were $45.75 billion, $43 billion and $38.7 billion in 2023, 2022 and 2021, respectively.
The net operating revenues in 2023 were up 6.4% year on year.
The net operating revenues in 2022 were up 11% year on year.
Gross profit was $27.2 billion, $25 billion and $23.3 billion in 2023, 2022 and 2021, respectively.
The gross margin was 59.5%, 58.1% and 60% in 2023, 2022 and 2021, respectively.
Net income was $10.7 billion, $9.6 billion and $9.8 billion in 2023, 2022 and 2021, respectively.
The net profit margin was 23.4%,22.3% and 25.3% in 2023, 2022 and 2021, respectively.
Total equity was $27.5 billion and $25.8 billion as of December 31, 2023 and December 31, 2022, respectively.
The return on equity was 39% and 37.2% in 2023 and 2022, respectively.
Cash Flow Analysis
Net cash provided by operating activities was $11.6 billion, $11 billion and $12.6 billion in 2023, 2022 and 2021, respectively.
Purchases of property, plant and equipment were $1.85 billion, $1.48 billion and $1.37 billion in 2023, 2022 and 2021, respectively.
The free cash flow was $9.75 billion, $9.52 billion and $11.23 billion in 2023, 2022 and 2021, respectively.
Purchases of stock for treasury were $2.3 billion, $1.4 billion and $111 million in 2023, 2022 and 2021, respectively.
Dividends were $8 billion, $7.6 billion and $7.3 billion in 2023, 2022 and 2021, respectively.
We see the amount of stock purchases and dividends as actual returns to shareholders.
The Coca-Cola Company’s operating performance for Q1 2024
Net operating revenues were $11.3 billion and $11 billion in the three months ended March 29, 2024 and the three months ended March 31, 2023, respectively.
The net operating revenues in Q1 2024 were up 2.7% year-on-year.
Net income was $3.19 billion and $3.11 billion in Q1 2024 and Q1 2023, respectively.
Basic net income per share was $0.74 and $0.72 per share in Q1 2024 and Q1 2023, respectively.
Conclusion
The Coca-Cola Company is great one with strong cash flow.
The dividend yield is about 3% with 25.6 times P/E.
We think the stock price is overvalued and then the reasonable valuation is $160 billion, which is equivalent to about capital returns of 5% (stock purchases and dividends).
Disclaimer: The content is for reference only and does not constitute investment advice.
Introduction
The Coca-Cola Company is a total beverage company, and beverage products bearing our trademarks, sold in the United States since 1886, are now sold in more than 200 countries and territories. We own or license and market numerous beverage brands, which we group into the following categories: Trademark Coca-Cola; sparkling flavors; water, sports, coffee and tea; juice, value-added dairy and plant-based beverages; and emerging beverages. We own and market several of the world’s largest nonalcoholic sparkling soft drink brands, including Coca-Cola, Sprite, Fanta, Coca-Cola Zero Sugar and Diet Coke/Coca-Cola Light.
