Coca-Cola Co (KO) DCF Valuation: Is The Stock Undervalued?

Johnny HopkinsStock ScreenerLeave a Comment

As part of a new series, each week we typically conduct a DCF on one of the companies in our screens. This week we thought we’d take a look at one of the stocks that are not currently in our screens, Coca-Cola Co (KO).


Founded in 1886, Atlanta-headquartered Coca-Cola is the world’s largest nonalcoholic beverage company, with a strong portfolio of 200 brands covering key categories including carbonated soft drinks, water, sports, energy, juice, and coffee. Together with bottlers and distribution partners, the company sells finished beverage products bearing Coca-Cola and licensed brands through retailers and food-service locations in more than 200 countries and regions globally. Coca-Cola generates around two thirds of its total revenues overseas, with a significant portion from emerging economies in Latin America and Asia-Pacific.

Recent Performance

Over the past twelve months the share price is down 5.77%.

KO Chart

KO data by YCharts


  • Discount Rate: 6.70%
  • Terminal Growth Rate: 2%
  • WACC: 6.70%

Forecasted Free Cash Flows (FCFs)

Year FCF (billions) PV(billions)
2024 11.47 10.75
2025 12.2 10.72
2026 12.98 10.69
2027 13.81 10.65
2028 14.69 10.62

Terminal Value

Terminal Value = FCF * (1 + g) / (r – g) = 318.80 billion

Present Value of Terminal Value

PV of Terminal Value = Terminal Value / (1 + WACC)^5 = 230.52 billion

Present Value of Free Cash Flows

Present Value of FCFs = ∑ (FCF / (1 + r)^n) = 53.43 billion

Enterprise Value

Enterprise Value = Present Value of FCFs + Present Value of Terminal Value = 283.94 billion

Net Debt

Net Debt = Total Debt – Total Cash =29.63 billion

Equity Value

Equity Value = Enterprise Value – Net Debt = 254.31 billion

Per-Share DCF Value

Per-Share DCF Value = Enterprise Value / Number of Shares Outstanding = $58.79


DCF Value Current Price Margin of Safety
$58.79 $57.13 2.82%

Based on the DCF valuation, the stock is undervalued. The DCF value of $58.79 per share is higher than the current market price of $57.13. The Margin of Safety is 2.82%.

It is important to note that this valuation is based on a number of assumptions, and these assumptions could change in the future. This valuation is meant to be a back-of-the-envelope analyse that could be used as a starting point in a much more thorough valuation process. As a result, it is important to do your own research before making any investment decision.

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