1.
444444444444444444444444444444444444444444444444444444444444444444444444
444444444444444444444444444444444444444444444444444444444444444444444444
444444444444444444444444444444444444444444444444444444444444444444444444
4444444444444444444444444444444444444
The
Coca
–
Cola
Company
Company
Analysis
Nicholas
Brunner
ABSTRACT
The
Coca
–
Cola
Company
analysis
focusing
on
the
industry,
sector,
qualitative
and
quantitative
analysis,
including
a
stock
recommendation.

2.
2
2
Table of Contents
Preface .................................................................................................................................3
Chapter I – Sector and Industry Analysis ............................................................................4
Section I – A Sector Analysis ...................................................................................................... 4
Section I – B Industry Analysis ................................................................................................... 6
Soda Production within the United States..........................................................................................6
Juice Production within the United States .........................................................................................7
Bottled Water Production within the United States...........................................................................8
Chapter II – Qualitative Analysis for the Firm....................................................................9
Content 2020......................................................................................................................................9
Market Share....................................................................................................................................10
Horizontal Integration......................................................................................................................11
Product and International Diversification........................................................................................11
Chapter III – Quantitative Analysis of the Firm................................................................12
Section III – A Financial Ratios ................................................................................................ 12
Liquidity Ratios................................................................................................................................12
Asset Utilization Ratios ...................................................................................................................12
Debt Ratios.......................................................................................................................................13
Profitability Ratios ...........................................................................................................................13
Section III – B Price Ratios........................................................................................................ 14
Chapter IV – Recommendation .........................................................................................14
Section IV – A Technical Analysis ........................................................................................... 14
50 Day and 200 Day Moving Average ............................................................................................14
Bollinger Bands................................................................................................................................15
Resistance Level ..............................................................................................................................16
Volume.............................................................................................................................................17
Section IV – B Final Recommendation ..................................................................................... 18
CAPM Model...................................................................................................................................18
Summarization and Recommendation .............................................................................................18
Works Cited ...........................................................................................................................

3.
3
3
Preface
The Coca-Cola Company is a beverage company that manufactures, markets and
sells nonalcoholic beverage concentrates, syrups, and ready-to-drink beverages worldwide.
Founded in 1886 when John Stith Pemberton invented the Coca-Cola formula and sold the
formula to Asa Candler who incorporated the Coca-Cola Company in 1892. The Coca-Cola
Company is headquartered in Atlanta, Georgia and generates sales from over 200 countries.
The Coca-Cola Company is a large component of the consumer staple sector. The
consumer staple sector is composed of consumer products such as food, drug retailing,
beverages, tobacco, household products, and personal products.
The Coca-Cola Company’s products include carbonated non-alcoholic beverages,
energy drinks, sports drinks, purified water, juice, ready-to-drink coffee and ready-to-drink
tea. With the acquisition of Coca-Cola Enterprises’ North American division in 2010, the
Coca-Cola Company shifted focus from a producer of syrups to controlling the production,
bottling and distribution of beverages. The Coca-Cola Company owns sixty-nine beverage
production facilities, ten beverage concentrate/syrup manufacturing plants, two bottled
water facilities and one juice concentrate facility within North America. Bottling and
distribution of Coca-Cola products outside of North America is handed by independent
Coca-Cola affiliates, with the largest being Coca-Cola Enterprises. Coca-Cola beverage
products are sold under 500 different brands, most notably Coca-Cola, Diet Coke, Fanta,
Sprite, Dasani, Minute Maid, Powerade, Simply, NOS, Honest Tea, Nestea, and Georgia.
Coca-Cola’s top competitors are Dr. Pepper Snapple Group Inc. (DPS), Nestlé
(NSRGY), and Pepsico Inc. (PEP). Dr. Pepper Snapple Group Inc. primarily
manufactures syrups and concentrates for nonalcoholic beverages under the brands Dr.
Pepper, Crush, Canada Dry, Sunkist, Hawaiian Punch, Snapple, AriZona, and Yoo-Hoo.
Nestlé manufactures and sells nutrition and wellness products worldwide. Beverages in
direct competition to Coca-Cola products are, Nestlé Pure Life, Poland Spring, Perrier,
Juicy Juice, Milo, and Nesquick. Pepsico manufactures and sells snacks, carbonated and
non-carbonated beverages. Beverages in competition to Coca-Cola include Pepsi,
Gatorade, Mountain Dew, Diet Pepsi, Aquafina, and Sierra Mist.

4.
4
4
Chapter I – Sector and Industry Analysis
Section I – A Sector Analysis
The Coca – Cola Company is one of the largest companies in the consumer
staples sector. The consumer staples sector, as described by Select Sector SPDRs, is
composed of “companies primarily involved in the development and production of
consumer products that cover food and drug retailing, beverages, food products, tobacco,
household products and personal products” Below are returns of all sectors within the last
ten years.
Source: Select Sector SPDRs
As you can see in the above chart the consumer staples sector has been one
of the most stable sectors of the market. In the downturn of 2008 – 2009 the
consumer staple sector returned the smallest loss; the consumer staple sector lost
9.49% while the S&P 500 lost 25.49%. Key statistics of the consumer staples
sector spdr etf (XLP) are below.
As you can see to
the left, the beta of
XLP is 0.50. Thus
the risk of the
consumer staples

5.
5
5
sector relative to the market is low. The low risk of the sector was seen by the
minimized loss in 2008-2009. If investors are pessimistic about the overall market,
the consumer staples sector is a valuable safe option since the sector minimizes
losses while still allowing for growth.
Recently, the consumer staples sector has experienced some of the fastest
growth. Below are the recent returns of the consumer staples sector spdr etf (XLP)
compared to other sectors.
Source: Select Sector SPDRs
As seen above, the consumer staples sector has experienced the highest
growth than any other sector for the last month, quarter, and calendar YTD as of
2/28/13. With high recent growth and a low beta, the consumer staples sector is a
viable option for investment.
Select
Sector Latest
Calenda
r One Annualized
SPDR
Fund Quarter YTD Year Three Five Ten SinceOne
Month Year Year Year Inception*
Materials
(XLB) -1.46% 2.46% 2.46% 6.36% 9.74% 1.33% 10.23% 6.96%
Health
Care
(XLV) 1.27% 8.78% 8.78% 22.42% 13.66% 7.93% 7.06% 5.63%
Cons Stap
(XLP) 3.27% 9.20% 9.20% 18.11% 15.38% 10.01% 9.93% 4.82%
Cons Disc
(XLY) 1.13% 6.86% 6.86% 19.18% 20.29% 12.04% 9.98% 6.40%
Energy
(XLE) 0.86% 9.18% 9.18% 6.03% 13.49% 2.17% 15.08% 10.52%
Financials
(XLF) 1.24% 7.27% 7.27% 21.49% 7.81% -5.32% 0.45% 0.41%
Industrials
(XLI) 2.33% 8.16% 8.16% 12.66% 14.81% 4.80% 9.99% 6.08%
Technolog
y (XLK) 0.88% 2.51% 2.51% 4.19% 12.72% 7.52% 8.76% 0.79%
Utilities
(XLU) 2.21% 7.14% 7.14% 11.60% 13.23% 3.97% 11.75% 5.51%

6.
6
6
Section I – B Industry Analysis
The Coca-Cola Company competes within the beverage industry, but more
specifically the soda production, juice production, and bottled water production
industries. This industry analysis focuses on the United States market and does not
consider Coca-Cola’s worldwide distribution system and emerging market growth
opportunities. The data and outlook for the following industry analyses was found on
IBISworld.
Soda Production
The soda production industry within the United States is composed of firms that
produce soda by blending various ingredients with carbonated water, package and
distribute these beverages for resale. The soda production industry does not include still
beverages, carbonated water, and functional beverages such as energy drinks. The major
competitors within the industry are The Coca-Cola Company, PepsiCo Inc, and Dr.
Pepper Snapple Group Inc; these top competitors control 65.4% of the market.
The soda production industry within the United States is currently in the decline
stage of the industry life cycle. Per capita soda consumption has been declining since
2004 and is expected to continue to decline as consumers within the United States
increase their concerns over health. As a result the soda production industry is projected
to contract over the next ten years at an annualized rate of 1.4%. There has been some
growth within the industry with new product introductions such as dry soda, but the
growth resulting from new products is not projected to outpace the decline in consumer
consumption. Consolidation within the soda production industry is projected to continue
as the largest firms compete to maintain market share as revenue is expected to decline.
The soda production industry within the United States has a high level of
competition. Competition is expected to increase over the next five years due to new
entrants into the industry and price pressure from the large competitors as they capitalize
on their efficiencies from consolidation. Established competitors in the industry have a
competitive advantage due to the range of products they offer. As consumer preferences
change, the large established competitors will be in a more advantageous position in
comparison to the newer smaller niche firms. Despite elastic prices within the industry,
established firms are able to markup up prices as they capitalize on product

7.
7
7
differentiation through brand loyalty and packaging design. The large competitors invest
heavily in advertising and marketing to create brand loyalty amongst consumers. As a
percentage of total revenue, advertising and marketing within the soda production
industry is three times more expensive than the average industry sector. Advertising and
marketing is expected to increase as firms try to stimulate demand for soda products.
Increased marketing expenses and declining revenue will lower profits over the next ten
years.
The soda production industry also experiences high external competition through
increased substitute products. Substitutes for soda include beer, wine, coffee, tea, juice,
and energy drinks. Over the last five years the juice production industry has reduced the
soda production revenue by providing consumers with direct substitutes for soda. These
substitutes are in line with the consumers’ interest in healthier alternatives. The
competition between the two industries is projected to increase. In addition to the juice
substitutes, companies such as Starbucks have introduced more convenient in home
methods of coffee and tea consumption. Overall, external competition with the soda
production industry is expected to increase.
High barriers to entry due to market saturation and regulation risks also
characterize the soda production industry. The soda production industry is currently at
risk of new labeling requirements by the FDA and higher sales tax on drinks that contain
large amounts of caffeine and sugar. Firms within the industry are also at risk of rising
commodity prices, specifically sugar, cocoa, aluminum and plastic.
Juice Production
The juice production industry is composed of firms that manufacture fruit juices,
functional drinks such as sports and energy drinks, ready-to-drink coffee and tea. The
industry does not include carbonated soda and unflavored water. The major competitors
within the industry are PepsiCo Inc, The Coca-Cola Company and Dr. Pepper Snapple
Group Inc. These top competitors combine for 68.1% of the market.
The juice production industry has experienced rapid growth within the last five
years and is in the growth stage of the industry life cycle. Growth of the industry is
expected to continue at an annualized rate of 6.8%, outpacing the economy. The growth
is a result of increased consumer disposable income. Impulse purchases and willingness

8.
8
8
to purchase more expensive alternatives to carbonated drinks are expected to increase
with disposable income. In addition, consumer’s increasing awareness to health concerns
will boost industry revenue.
Internal competition within the juice production industry is high and increasing.
Due to new and changing products, competitors must quickly react to new consumer
preferences. Product differentiation is possible through brand loyalty, price and
ingredients. Marketing and advertising is used extensively throughout the industry as
competitors attempt to build brand loyalty amongst consumers. Competitors attempt to
differentiate through unique products and flavors. Yet, differentiation is quite difficult
since competitors react quickly to market trends. External competition has been declining
as soda consumption has weakened and lower disposable income decreased consumption
within the bottled water industry the most.
The main risk to the juice production industry is the threat of increased regulation.
Regulation of marketing has been increasing within the industry in addition to public
scrutiny following the high levels of arsenic found in apple and grape juice. Other threats
to the industry are volatile and increasing input prices.
Barriers to entry within the industry are medium, as production costs and the
initial investment are high. Yet there is opportunity for niche competitors within local
markets. Consolidation within the industry is expected to increase as the major
competitors seek to capitalize on the industries’ high growth.
Bottled Water Production
The bottled water production industry is composed of firms that fill bottles with
purified water. The major competitors within the industry are Nestle, The Coca-Cola
Company, and PepsiCo Inc. These top competitors combine for 86.6% of the market.
The bottled water industry is currently in the maturity stage of the industry life
cycle. Despite expected annualized growth of 2.1% to 2017, the industry’s industry value
added is expected to decline as the economy grows faster than the industry. The decline
in industry value added is a result of increased automation of production and not a
decrease in bottled water consumption. Consumer consumption is expected to increase
with an increase in disposable income as consumers recover from the economic
downturn.

9.
9
9
Competition within the bottled water industry is high. Firms within the industry
compete on price and brand loyalty. Consumers tend to like a consistent taste to water,
thus firms compete to match consistency within their products to earn brand loyalty.
External competition with the bottled water industry is also high. Despite the decline in
consumer consumption of carbonated soft drinks, juice consumption and consumption of
direct substitutes to bottled water have increased. As consumer disposable income
declined, consumers turned to alternatives such as tap water and filtered water products.
The bottled water industry is at the risk of increasing plastic prices, increased
consumer concern for environmental issues, and increased regulation by the EPA and
FDA. The bottled water industry has high barriers to entry due to water regulation,
technological change, and consumer brand loyalty.
Chapter II – Qualitative Analysis for the Firm
Content 2020
The Coca-Cola Company has announced a revolutionary marketing strategy with
the goal of doubling the size of the company by 2020 as seen in prizi presentation posted
on Youtube. The plan of content 2020 is to utilize content marketing and engage
consumers in a more dynamic fashion. Content 2020 focuses on two main concepts,
liquid and linked. Liquid refers to marketing content that makes the consumer want to
send the content to others. Coca-Cola plans on creating content so remarkable that
consumers can’t wait to share the content with more people. Linked refers to the content
remaining close to the underlying business goals of the organization. Through liquid and
linked marketing, Coca-Cola believes they will be able to increase brand loyalty and thus
drive consumer consumption of their products.
Another key aspect of content 2020 is the 70/20/10 plan. The 70/20/10 plan is an
idea of how to divide their marketing budget into different marketing concepts. Seventy
percent of Coca-Cola’s budget will be utilized for low risk, historically effective content.
Twenty percent will be utilized for spin off material that is more detailed. The final ten
percent will be used for high-risk content that is revolutionary and could have
tremendous rewards or fail to be effective.
The goal of content 2020 is to double the size of the Coca-Cola Company by
increasing brand loyalty through content marketing. Content 2020 shows an initiative by

10.
10
10
the management of Coca-Cola to focus on future growth potential while not jeopardizing
current strengths of the firm. It is to early to tell if content 2020 will translate into higher
sales, but the project at least shows that management is focused on long run growth and
not just short-term profits.
Market Share
One of the strongest assets of the Coca-Cola Company is the company’s market
share of the soda production, bottled water production and juice production industries.
The Coca-Cola Company’s market share of these three industries can be seen in the
charts below.
The Coca-Cola Company currently holds a 32.7% market share of the soda
production industry, 21.6% market share of the bottled water production industry and
26.8% market share of the juice production industry. The Coca-Cola Company’s large
market share allows the company to earn above average returns within each industry. The
large market share is attributed to strong brand loyalty amongst consumers, efficiencies
developed within the production process, and strong product placement. Although the
soda production industry within the United States is projected to contract in the future,
the large market share will allow the Coca-Cola Company to generate profits within the
industry and invest within the expanding juice production industry. In addition to

11.
11
11
investing in emerging markets such as the BRIC nations and others in which soda, juice
and bottled water consumption is growing faster than the United States.
Horizontal Integration
In 2010 the Coca-Cola Company purchased the North American operations of the
largest Coca-Cola bottling company, Coca-Cola Enterprises as reported by Burritt and
Stanford of Bloomberg. The purchase was shortly after PepsiCo Inc purchased a portion
of bottling operations from one of their largest bottling companies. The purchase by
Coca-Cola was driven by the intent to lower costs by bringing the bottling operations in
house. Although the purchase may result in lower costs and higher profits, the move does
not come without integration risks. The Coca-Cola Company is now more invested in the
beverage industry within the United States, thus an exit due to lower than anticipated
demand will be more costly.
Product and International Diversification
The Coca-Cola Company is quite diversified within the beverage industry and
globally. Coca-Cola products are consumed within over 200 countries as reported by
Morningstar. Thus, the Coca-Cola Company is not dependent upon any one particular
country or region. This reduces the company’s risk to country specific recessions and
slow growth. Coca-Cola is building brand loyalty within emerging markets which will
likely lead to increased growth over the future. Specifically, Coca-Cola plans on
investing five million dollars in India within the next seven years as reported by Gulati
and Ahmed of the Wall Street Journal.
The Coca-Cola Company owns over 500 different brands as noted on the Coca-
Cola Company official website. These products include classic Coca-Cola soda, Georgia
ready to drink chilled coffee, DASANI bottled water, Bacardi Mixers, Vitaminwater, Full
Throttle energy drinks and Simply Orange juice. Diversification of products allows the
firm to position themselves for continued growth. As one industry may diminish, such as
the soda industry within the United States, another industry may growth quickly, such as
the juice industry.

12.
12
12
Chapter III – Quantitative Analysis of the Firm
Section III – A
Liquidity
Ticker
Company
Name
Current
Ratio
Quick
Ratio
Net
Working
Capital
to
Assets
DPS
Dr.
Pepper
Snapple
Group
Inc
1.10
0.80
0.012
KO
The
Coca-­‐Cola
Company
1.10
0.80
0.047
NSRGY
Nestle
0.90
0.60
-­‐0.014
PEP
Pepsico
Inc
1.10
0.80
0.022
Source: Yahoo! Finance & Bloomberg Businessweek
Liquidity ratios express a firm’s ability to pay off liabilities within a short time
period. The Coca-Cola Company’s liquidity ratios are very similar to their competitors.
No company within the industry has a strong advantage of liquidity, but Nestle is at a
disadvantage. Nestle has a current and quick ratio less than one. Thus, Nestle is not able
to meet their current obligations with their current assets. The difference in liquidity
ratios between Nestle and the competition may have to do with the broader industries
Nestle competes in as compared to Dr. Pepper Snapple Group, The Coca-Cola Company
and PepsiCo Inc.. The Coca-Cola Company does have a higher Net Working Capital to
Asset ratio than their competitors.
Asset Utilization
Ticker
Company
Name
Receivables
Turnover
Inventory
Turnover
Fixed-­‐Asset
Turnover
Total
Asset
Turnover
DPS
Dr.
Pepper
Snapple
Group
Inc
10.50
12.20
5.10
0.70
KO
The
Coca-­‐Cola
Company
9.90
6.00
3.30
0.60
NSRGY
Nestle
9.50
5.30
3.60
0.80
PEP
Pepsico
Inc
11.00
8.40
3.40
0.90
Source: Yahoo! Finance & Bloomberg Businessweek
Asset Utilization ratios examine a firm’s efficiency. The Coca-Cola Company’s
asset utilization ratios are within the range of their competitors. The Coca-Cola Company
has a low inventory turnover as compared to its competitors. Although the Coca-Cola
Company is not the lowest, this could be problematic since it indicates a slower

13.
13
13
replacement of inventory due to either lower sales or high inventory levels. Dr. Pepper
Snapple Group Inc. has a large advantage as compared to its competitors in inventory
turnover and fixed-asset turnover. Overall, the firms within the industry are within line to
one another.
Debt Utilization
Ticker
Company
Name
Total
Debt
to
Equity
Total
Liabilities
to
Total
Assets
Times
Interest
Earned
DPS
Dr.
Pepper
Snapple
Group
Inc
123.00
74.50
N/A
KO
The
Coca-­‐Cola
Company
98.30
61.50
30.75
NSRGY
Nestle
44.50
50.40
23.48
PEP
Pepsico
Inc
126.60
70.00
10.24
Source: Yahoo! Finance & Bloomberg Businessweek
The Coca-Cola Company is within the range of their competitors in regard to debt
utilization ratios. The Coca-Cola Company is on the lower end of the Liabilities to Asset
ratio, which indicates that the Coca-Cola Company has fewer liabilities to assets in
comparison to their competitors. This places Coca-Cola at an advantage as they have
lower debt levels in comparison. The Coca-Cola Company has an AA- credit rating as
reported by Morningstar. The high credit rating reiterates the Coca-Cola Companies
strong financial position. Nestle’s Total Debt to Equity ratio is concerning, since the low
ratio signifies a large amount of equity as compared to competitors. This could be a drag
on retained earnings since equity is more expensive for a company than debt.
Profitability
Ticker
Company
Name
Gross
Profit
Margin
ROA
ROE
DPS
Dr.
Pepper
Snapple
Group
Inc
58.30%
7.50%
27.69%
KO
The
Coca-­‐Cola
Company
60.32%
8.44%
27.92%
NSRGY
Nestle
47.58%
7.51%
18.30%
PEP
Pepsico
Inc
52.22%
7.97%
28.70%
Source: Yahoo! Finance & Bloomberg Businessweek
The Coca-Cola Company has an advantage of higher profitability ratios than their
competitors. The Coca-Cola Company has the highest gross profit margin, ROA and
second highest ROE. Although the differences are not significant, the higher profitability

14.
14
14
ratios indicate higher sales revenue and cost control. Higher sales may be due to Coca-
Cola’s ability to price their products higher than the competition due to strong brand
loyalty within the soda industry. Cost control is a initiative of the company as seen by the
acquisition of the North American bottling operations in order to lower production costs.
Section III – B
Ticker
Company
Name
Trailing
P/E
Forward
P/E
Price/Sales
per
share
Price/Book
Value
per
share
PEG
DPS
Dr.
Pepper
Snapple
Group
Inc
15.71
14.01
1.57
4.17
2.60
KO
The
Coca-­‐Cola
Company
20.58
17.40
3.73
5.47
2.11
NSRGY
Nestle
20.57
17.42
2.37
3.60
3.85
PEP
Pepsico
Inc
20.27
16.67
1.86
5.44
2.48
Source: Yahoo! Finance & Bloomberg Businessweek
The Coca-Cola Company has a high price/sales per share ratio and a low PEG
ratio as compared to its competitors. The higher price/sales per share ratio is concerning
but the low PEG ratio indicates that the company is less expensive in comparison to its
growth rate than the competition. The main concern within the price ratios is the trailing
and forward P/E. All of the companies above have a lower forward P/E ratio as compared
to the trailing P/E ratio. This indicates that analysts predict slowed growth for the entire
beverage industry. In addition, the Coca-Cola Company, Nestle and PepsiCo Inc all have
trailing P/E ratios higher than the overall market. The high P/E ratio is likely a direct
result of the recent high growth within the consumer staples sector and juice production
industry.
Chapter IV – Recommendation
Section IV – A Technical Analysis
50 and 200 Day Moving Average
As seen in the one-year chart with the 50-day and 200-day moving average below,
Coca-Cola is currently appreciating in value. The 50-day average is above the 200-day
average, indicating that the value of the Coca-Cola Company stock is increasing. This is a
bullish indicator, as the buy signal was within the last month.

15.
15
15
Source: Yahoo! Finance
Bollinger Bands
Bollinger Bands measure the moving average of the stock price and set an upper
band and lower band two standard deviations away from the average. Technical analysis
through the use of Bollinger Bands indicates that the Coca-Cola Company is a slight sell
as the stock is closer to the upper band than the lower. The analysis can be seen in the
charts below.
Source: Yahoo! Finance
Seen above the Coca-Cola Company recently broke the upper band indicating a
sell signal. Within the last few weeks, the stock has fallen and recovered, moving towards
the middle of the Bollinger Band.

16.
16
16
Source: Yahoo! Finance
Above is a closer examination of the Coca-Cola Company through the use of
Bollinger Bands. The recent sell signal can be seen shortly after March 22, when the
stock price exceeded two standard deviations of the moving average.
Resistance
Upon analysis of the 1-month price movement of the Coca-Cola Company, a
resistance level can be found. During the recent upward movement, the stock peaked at
$40.69 on March 26, which was the sell signal through the use of the Bollinger Band.
Since the peak, the stock fell to $40.22 and slowly rose to a second peak slightly above
the previous at $40.71. The stock has since fallen and is now appreciating towards the
resistance level. If the stock is able to break the resistance level look for the volume to
increase and the stock price to quickly appreciate.

17.
17
17
Source: Yahoo! Finance
Volume
The amount of trading volume can often be an indicator of the investor’s outlook.
During the recent upward movement of the price of KO, the volume of trades only broke
the moving average twice, and within the last two weeks the trading volume has been
slowly declining. This is not a positive indicator for future price appreciation.
Source: Yahoo! Finance

18.
18
18
Section IV - B
CAPM Model
Required Return = Risk Free Rate + Beta (Expected Market Return – Risk Free Rate)
RR = 1.69% + 0.37 (11% - 1.69%)
RR = 1.69% + 3.4447%
RR = 5.1347%
Given the low yield on the 10-year Treasury bill and Coca-Cola’s low beta, the
required return is annualized rate of just 5.1347%.
Summarization and Recommendation
The Coca-Cola Company is a part of the consumer staples sector. The consumer
staples sector is a lower risk sector since growth is lower and more consistent. This
means that the consumer staples sector is more adequate for conservative investment. Yet
recently, the consumer staples sector has returned the highest growth within the last
quarter, month and YTD as of February 28, 2013.
The Coca-Cola Company competes within the beverage industry. More specially,
Coca-Cola competes within the soda production, juice production and bottled water
production industries. Within the United States, the soda production industry is expected
to contract. Despite the contraction, the Coca-Cola Company’s large market share will
allow the company to use profits to invest in the booming juice production industry. In
addition, the Coca-Cola Company is focused on long term growth through content
marketing and investment within emerging markets. The Coca-Cola Company’s 500 plus
brands within over 200 countries provides the company with sufficient diversification to
sustain growth and minimize exposure to region specific economic downturns.
The Coca-Cola Company has a strong financial position and strong quantitative
ratios as compared to its competitors. Coca-Cola’s strength is their profitability ratios.
The Coca-Cola Company has the highest gross margin, ROA and second highest ROE.
The firm is in a strong position to pay current liabilities and has a high quality credit
rating. The cause for concern is the Coca-Cola’s growth rate as predicted by analysts. The
trailing P/E ratio is higher than the forward P/E; meaning future growth is expected to be
less than previous growth. In addition, the Coca-Cola Company’s trailing P/E ratio is
higher than the overall market.

19.
19
19
Technical analysis of the Coca-Cola Company shows that the firm has recently
been appreciating. Short-term future appreciation is questionable as the stock seems to
have hit a resistance point at $40.71 and volume has not been increasing despite recent
appreciation.
With a low required return of 5.1347%, future growth potential within the juice
production industry in the US, investment within emerging markets, and management’s
focus on long run growth, the Coca-Cola Company is a good long-term, conservative
investment. The Coca-Cola Company’s strong market share and profitability will benefit
investors with dividends and potential growth through funding expansion of their market
share within growing industries. The Coca-Cola Company should be bought for safety of
principal and income. The Coca-Cola Company issues a current dividend of 1.12
resulting in a dividend yield of 2.7%. In addition, the Coca-Cola Company has a low beta
since the company has high diversification and market share within established profitable
industries. The Coca-Company should be considered as a portfolio anchor within the
volatile equity market.

20.
20
20
Works Cited
Ahmed, Rumman and Gulati, Nkhil. "India Has 1.2 Billion People but Not Enough Drink
Coke.” The Wall Street Journal. Web 11 Feb 2013.
"All Brands." The Coca-Cola Company. Web. 6 Feb 2013.
“Bottled Water Production Industry in the US.” IBISWorld. Web. 6 Apr 2013.
Burrit, Chris, and Duane Standford. "Coca-Cola to Purchase Bottler in $12.3 Billion
Deal." Bloomberg. 25 Feb 2010. Web. 11 Apr 2013.
"Coca-Cola Co KO." Morningstar. Web. 11 Apr 2013.
Coca-Cola Content 2020. 2012. Youtube. Video. Web. 11 Apr 2013.
"Consumer Staples SPDR – XLP." Select Sector SPDRs. Web 6 Feb 2013.
“Dr. Pepper Snapple Group Inc (DPS:New York).” Bloomberg Businessweek. Web 3 Apr
2013.
"Dr. Pepper Snapple Group (DPS) Profile." Yahoo! Finance. Yahoo!. Web. 6 Feb 2013.
“Juice Production Industry in the US.” IBISWorld. Web. 6 Apr 2013.
Mullarkey, Thomas. "Coke's Global Brands and Distribution Network are Unmatched."
(2013). Morningstar. Web. 7 Apr 2013.
"Nestle (NSRGY) Profile." Yahoo! Finance. Yahoo!. Web. 6 Feb 2013.
“Nestle Sa-Spons Adr For Reg (Nsrgy:Otc Pink - Current Information.” Bloomberg
Businessweek. Web 3 Apr 2013.
“Pepsico Inc. (PEP:New York).” Bloomberg Businessweek. Web 3 Apr 2013.
"Pepsico Inc. (PEP) Profile." Yahoo! Finance. Yahoo!. Web. 6 Feb 2013.
"Soda Production Industry in the US." IBISWorld. Web. 4 Apr 2013.
"The Coca-Cola Company SWOT Analysis." Company Profile: The Coca-Cola
Company. Business Source Complete. Web. 6 Feb 2013.
"The Coca-Cola Company Heritage Timeline." The Coca-Cola Company. Web. 6 Feb
2013
“The Coca-Cola Company (KO:New York Consolidated).” Bloomberg Businessweek.
Web 3 Apr 2013.
"The Coca-Cola Company (KO) Profile." Yahoo! Finance. Yahoo!. Web. 6 Feb 2013.