I reviewed some fundamentals for 1988 and 1998. I believe 1988 is when Buffet bought the stock. Stock
What if Price Using
1988 1998 $ 34 p/s 1988 ratios
Price to Sales 1.93 9.20 4.25 15.73
Price to Cash Flow 11.63 39.47 17.89 22.09
Price to Earnings 13.90 48.00 21.25 22.93
Price to Book Value 4.67 21.43 9.7143 16.35
Dividend Yield 3.00 % .84 % 1.84 21
Dividends to NetProfit 42 % 37 % 37 % 37 %
Any comments. Just some info. Is my analysis wrong, please help.
> Is my analysis wrong, please
You're saying that if we valued KO based on various
1988 we'd get some valuation lower than
the current market
price. That much is correct. No
one is going to deny that.
But so what?
because it was an outrageously good buy at some earlier
date doesn't mean it's not a good buy now.
someone offers to sell you a 3 carat diamond for $75,
you buy it? Would the fact that the seller bought it
ten years ago bother you?
You may think
my metaphor is absurd, but which do think will
more valuable 50 or 60 years from now, your KO share
all its future dividends and splits) or the
The analyst are correct the market has varied
from time to time and if you can time the market you
can teach what you know and be very rich indeed . The
best way to buy stock is to buy on a regular basis
continously and you will have an average cost some high some
low in relation to the pe . This is the only sensible
way to buy . If you think KO is high now don't buy
If you think its too high now wait until next year .
and remember the saddest of all things is what might
Mark Twain was a friend of Alexander
Graham Bell and was asked to help in the funding of his
new telephone , to which Mark Twain responded that is
the dumbest thing he ever heard of ,"who's going to
sit and talk on that fool contraption , if i am going
to talk to you I'll come to see you . You have heard
the rest of the story. Another bear story to read to
your grandchildren, and tell them about the time when
you could have purchased KO for 76 dollars .
buffett story on numbers is interesting about the island
of Manhattan when the Indians sold it to the little
dutchman Peter M. for 24 dollars think that was a bad deal
. wrong the unimproved value of Manhattan Island is
currently valued at 24 billion dollars according to Buffett
if the Indians had a financial advisor and had
invested in a modest 6% return the 24 dollars would be
worth in excess of the current value of Manhattan .
Time + compounded interest is the the 8th wonder of
try it you will like it .
i did a little analysis on all of asia and india and came to
the conclusion that if asians drink by the year 2007
100 cokes per year each, we will have a eps in that year of
$ 9.40. If you multiply that by a pe of 40 you get a stock price
of $ 376 this analysis is based on ko making a 1.5 penny profit per can sold. If you compound that result over ten years, you
get an ten year estimated growth rate of 17+% for ko' eps.
the market price, currently $ 76 as i am writing this, if it
goes to $376 in 2007 the compounded growth rate on
the market price will be 17.34%. I'll be very happy making
17.34% gain on my investment in ko every year.
India and China acount for more than 2 BILLION of the world population. Just imagine if KO got there consumption to even 10 servings a day. Thisnumber would more than double KO's volume growth. And imagine if consumption is at North AMerican levels (350) per person a year. Ko's earnings would soar. The P/E is well deserved and the stock WILL SKYROCKET!
When I said 19%, I was talking about the 5 year net income
growth for the last five years which was actually 19.9%.
The information is from the latest 10-k report on page 41.
I think the future may surprise you looking out to the year
2000, KO will have 1,000,000 outlets in India selling
their products by that time. How can you possibly forcast the
earnings when the growth potential of the Emerging Countries are
growing like gangbusters and is unknown to everyone.
Put your seatbelt on for I believe that KO will surprise
everyone in the future with Volume Growth that we have never
seen in the past.
When I bought the stock the growth rate was around 19% and the p/e around 22. My cost is around $12 a share and I still
think the stock is overvalued looking at future earnings estimates. Ko eps 1996- $1.40 Ko eps 1997 - $1.64 with a .23 one time
gain. 1998 - eps est. $1.65 and 1999- eps est.$1.93 where is the 19% growth now. Ko management does a great job of steering
analyst to the right number. 1st quarter was a perfect example when analyst estimates where for .36 and then went down to my number
of .34 before they released the earnings, this way earnings met analyst estimates. That is why the street loves ko because they
do not surprise them with earnings. Now management is saying 15% to 20% eps growth and I am saying 15% max.
Does anybody know this ..
I haerd from a friend in Wall st .
that all the soft drinks market from
Pepsi are taken by KO ..
So KO means THE SOFT DRINK ..
Any information will be appreciated.