Valuation Scorecard: Stock Rating C-Neutral (2/26/24)-Coca Cola Consolidated Inc (COKE).

To achieve average annual stock market performance of 9.0% over the next 6 years, Coca Cola Consolidated shares will need to reach $1411. To achieve Upper quartile performance, Coca Cola Consolidated’s stock price will need to reach $1661 by 2028. At the current price of $842, what is the market’s view of Coca Cola Consolidated’s future operating performance?

Executive Summary

• Key Coca Cola Consolidated characteristics: high financial strength, very high profitability, high expected growth, and stability. A big positive influence on Coca Cola Consolidated’s valuation is its superior Risk Profile.
• Very high valuation, leading shareholder returns. Current valuation levels are very high relative to the Coca Cola Consolidated Peer Group. Recent market returns have significantly outperformed the Coca Cola Consolidated Peer Group. Total shareholder returns expected to lag the overall equity market. Based on current investor expectations, Coca Cola Consolidated shares should reach a level of $1289 by 2028 — an 7.6% per year total shareholder return. A 2028 stock price of $1411 would reflect median performance and a price of $1661 would be required to reach upper quartile performance.
• Coca Cola Consolidated’s past growth is modestly above average. Historical growth has been high relative to the Coca Cola Consolidated Peer Group and forecasted growth is relatively high. Equity Growth, and EPS Growth have been superior. Revenue Growth has lagged. Coca Cola Consolidated’s historical income statement growth and balance sheet growth have diverged. Revenue growth has paralleled asset growth; earnings growth has exceeded equity growth resulting in an improving return on equity.
• Pretax ROA, Pretax Margin, and Return on Equity are group leading. These factors have strengthened market perceptions of Coca Cola Consolidated. The company has very high excess cash and will have to work to reinvest at attractive returns to support profitability and valuation.
• Risk Profile has been Coca Cola Consolidated’s biggest valuation strength. Coca Cola Consolidated’s risk profile is very favorable. Overall variability has been very low with very low revenue variability, very high E.P.S. variability, and very low stock price volatility. Financial Strength is relatively very high and earnings’ expectations are unavailable. The debt/capital ratio has declined very significantly.

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