Is The Coca-Cola Company (KO) overvalued?
On Equity Rank's model estimate, KO trades 18% above its fair value. The Coca-Cola Company (KO) last closed at $95.67; the multi-method model fair value is $80.80.
| Price | Model fair value | Price vs model |
|---|---|---|
| $95.67 | $80.80 | 18% above |
What the answer rests on
- 1 of 10 valuation methods put KO's value above its price and 9 put it below, so the methods mostly agree.
- To justify today's price, KO's free cash flow would need to grow about 14.6% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew -17.8% a year.
- KO trades at 28.3 times its last year's earnings, against a median of 20.3 for 19 profitable Beverages companies.
- Over the past year the price sat below the model fair value on 17% of trading days. The gap ranged from 5% below to 54% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind KO's fair value · What prices assume · Other companies