Professional Documents
Culture Documents
Ramjee Prasad
10804900
RH6802B54
B.Tech ECE LEET(3rd Year)
Coca Cola
Pay
Exercised
Index Membership:
Sector:
Consumer Goods
$0
Industry:
$0
92,400
$0
Mr.
Alexander
Benedict
Cummings
Jr.,
52
Chief Admin. Officer, Exec. VP and Chief Operating Officer of Africa $ 1.59M
Group
$0
History
The Coca Cola history extends back to 1885, when John Pemberton invented the original recipe for a
new cocawine. He named it Pemberton's French Wine Coca, which was believed to be inspired by
Vin Mariani, a popular cocawine invented by Angelo Mariani. Pemberton developed Coca-Cola, a
non-alcoholic version of his original cocawine, when Fulton County passed prohibition legislation.
Carbonated water was added later by accident when Pemberton was mixing drinks for a friend and
incidentally included it. His friends loved the new taste, so he altered the original formula to
incorporate it.
This made the first big break in Coca Cola history. Candler incorporated The Coca-Cola Company in
1982, and began marketing the product. The drink achieved the status of national icon for the USA by
its 50th anniversary. Bottles of Coca-Cola were sold starting in 1894, and cans in 1955. The first
bottle was sold in Vicksburg, Mississippi. In 1899, Chattanooga, Tennessee became the first site of a
Coca-Cola bottling company.
In Pemberton's original formula, he added five ounces of coca leaf (cocaine) per gallon of syrup.
Candler claimed that he altered the formula and only added a tenth of the amount. Coca Cola once
contained an estimate of nine milligrams of cocaine per glass. It wasn't until 1903 that it was removed
from the drink altogether, replacing it with coca flavoring.
"New Coke" came out in 1985 after Coca-Cola attempted to change the original formula. Most
consumers preferred the taste of the original Coca-Cola, and many ceased purchasing the product
until the company switched back to the original formula. It was renamed Coca Cola Classic to show
consumers that the drink had reverted back to its original formula.
By the 21st century, Coca Cola history took another leap in the market. In 2005, the company
launched "Diet Coke", sweetened with artificial flavors. Later in 2005, it announced "Coca Cola
Zero", sweetened with aspartame and acesulfame potassium. Since then, the company has produced
other products containing the same Coca-Cola formula with minor differences.
Coca Cola is now being sold around the world, in more than 200 different countries. The Coca-Cola
company now sponsors an assortment of events, including the "Olympic Games", and "NASCAR". In
England, it is the primary sponsor of "The Football League". It is also featured in several television
shows including "The Gods Must Be Crazy."
Coca Cola history has come a long way since Pemberton invented the original
recipe, and continues to grow by leaps and bounds. It is no surprise that it is one
of the leading soft drinks of the market.
Q3
FY09
Q2 FY09 Q1 FY09
Q4 FY08
Q3
FY08
Income
247.00
M
313.00 M 61.00 M
-1.45 B
214.00
M
254.00
M
256.00 M 262.00 M
244.00 M
263.00
M
254.00
M
256.00 262.00 M
M
244.00 M
263.00
M
6.00 M
21.00
M
242.00
M
235.00 305.00 M
M
257.00 M
265.00
M
Q3
FY09
Period Ending
Income
247.00
M
Q3
FY08
Q2 FY09 Q1 FY09
Q4 FY08
313.00 M 61.00 M
-1.45 B
214.00
M
Funds from/for
Activities
-298.00 -372.00 M
M
-269.00 M
-399.00
M
107.00
M
-63.00 -67.00 M
M
-12.00 M
-134.00
M
to 190.00
M
233.00 207.00 M
M
202.00 M
180.00
M
Other
Operating -135.00
M
(Additions
1.00 M
3.00 M 17.00 M
4.00 M
2.00 M
Aquisitions
Increase in Investments
0.00
0.00
0.00
0.00
0.00
Decrease/Sale of Investments
0.00
0.00
0.00
0.00
0.00
1.00 M
0.00
0.00
0.00
0.00
259.00
M
235.00 193.00 M
M
300.00 M
178.00
M
14.00
M
11.00 M
8.00 M
11.00 M
14.00
M
11.00 M
6.00 M
11.00 M
0.00
0.00
2.00 M
0.00
0.00
0.00
0.00
0.00
34.00 M
34.00
M
29.00 M
28.00 M
19.00 M
772.00
M
104.00 618.00 M
M
474.00 M
724.00
M
807.00
M
395.00 421.00 M
M
122.00 M
448.00
M
498.00 0.00
M
0.00
156.00
M
Increase/Decrease
Borrowings
in
Short
0.00
Term 0.00
0.00
1.00 M 6.00 M
0.00
0.00
-69.00
M
188.00 185.00 M
M
332.00 M
268.00
M
-3.00 M
0.00
-1.00 M
-3.00 M
1.00 M
Q3
FY09
Period Ending
Income
247.00
M
Q3
FY08
Q2 FY09 Q1 FY09
Q4 FY08
313.00 M 61.00 M
-1.45 B
214.00
M
19.00 M
-47.00
M
FY2005
FY2004
-110.00 -74.00 M
M
Period Ending
FY2008
FY2007
FY2006
-4.39 B
711.00 M -1.14 B
514.00 M
596.00
M
1.05 B
1.07 B
1.01 B
1.04 B
1.07 B
Operating Activities
Depreciation, Depletion & Amortization
Depreciation & Depletion
1.05 B
1.07 B 1.01 B
1.04 B
1.07 B
75.00 M
124.00 M 169.00 M
255.00 M
331.00
M
76.00 M
124.00 169.00 M
M
255.00 M
331.00
M
7.62 B
-48.00 M
2.90 B
-75.00 M
-122.00
M
1.68 B
1.75 B
1.70 B
1.56 B
1.67 B
0.00
0.00
0.00
0.00
-93.00 M
-111.00 M
58.00 M
-51.00
M
Extraordinary
Operations
Items
&
Discontinued 0.00
-57.00
M
-118.00
M
-42.00 -173.00 M
M
-30.00 M
-21.00
M
-24.00
M
-105.00 46.00 M
M
-48.00 M
-2.00 M
135.00
M
211.00 -19.00 M
M
264.00 M
57.00 M
-128.00 M
-85.00
M
-157.00 35.00 M
M
1.62 B
1.66 B
1.59 B
1.62 B
1.62 B
0.00
0.00
0.00
0.00
0.00
0.00
0.00
106.00 M
0.00
0.00
Q3
FY09
Period Ending
Q2 FY09 Q1 FY09
Q4 FY08
Q3
FY08
Income
247.00
M
313.00 M 61.00 M
-1.45 B
214.00
M
0.00
0.00
0.00
0.00
0.00
Decrease in Investments
0.00
0.00
0.00
0.00
0.00
18.00 M
68.00 M
50.00 M
48.00 M
24.00 M
12.00 M
4.00 M
14.00 M
0.00
0.00
0.00
0.00
0.00
0.00
0.00
975.00
M
874.00 M 952.00 M
854.00 M
922.00
M
123.00 73.00 M
M
40.00 M
181.00
M
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
2.02 B
1.08 B
1.54 B
558.00
M
0.00
0.00
0.00
0.00
1.62 B
2.36 B
1.30 B
18.00 M
Decline
1.61 B
in
Short
Term 0.00
1.62 B
2.83 B
138.00
M
116.00 M 114.00 M
76.00 M
76.00 M
138.00
M
116.00 M 114.00 M
76.00 M
76.00 M
0.00
0.00
0.00
0.00
0.00
3.00 M
11.00 M
4.00 M
46.00 M
0.00
3.00 M
11.00 M
4.00 M
46.00 M
0.00
-126.00
M
-799.00 M -571.00 M
-804.00 M
-632.00
M
-18.00
M
4.00 M
-9.00 M
14.00 M
10.00 M
Some investors consider seasonal performance when purchasing or selling stocks. This chart
illustrates the average monthly return for the past 5 years. Users often also consider the number of
times a stock increases or decreases for any given month. Mouse-over the chart to view 5 years of
history for each month.
Seasonal Performance Data: CCE
Returns
Jan
Feb Mar Apr May Jun
Jul
Aug Sep
Oct
Nov Dec
Avg.
-1.85
0.57 2.90
5.12
0.41
-1.43 3.45
#Times CCE 48
Stock Price
Increased
47 57
51
59
45
53
53
48
53
52
48
#Times CCE 1
Stock Price
Unchanged
#Times CCE 52
Stock Price
Decreased
48 50
51
45
58
49
56
52
55
48
55
2009 %
-6.64
2008 %
11.36
5.90 -0.87 -7.07 -10.48 -14.09 -2.13 0.83 -1.75 -40.06 -8.65 31.05
2007 %
0.49
0.85
2.13
8.35
6.43
2.78
2006 %
2.97
3.51
0.45
-3.97 0.67
3.61
5.35
2005 %
5.28
0.59
2004 %
Returns %
PRICES
-10.92 3.04
0.62
0.23
2.10
-0.14
6.77
1.91
-0.25
0.24
6.56
Date
Open
High
Low
Close
Volume
Adj Close*
4-Dec-09
20.18
20.18
19.74
19.91
3,430,200
19.91
3-Dec-09
19.95
20.10
19.84
19.86
3,473,100
19.86
2-Dec-09
19.78
20.02
19.72
19.97
3,016,300
19.97
1-Dec-09
19.78
19.95
19.73
19.75
3,605,800
19.75
30-Nov-09
19.91
19.98
19.59
19.65
5,927,600
19.65
27-Nov-09
19.98
20.00
19.72
19.93
1,291,400
19.93
25-Nov-09
20.32
20.44
20.18
20.37
2,238,500
20.37
24-Nov-09
20.40
20.60
20.12
20.30
3,577,400
20.30
24-Nov-09
$ 0.08 Dividend
23-Nov-09
20.57
20.74
20.50
20.60
2,314,400
20.52
20-Nov-09
20.17
20.49
20.12
20.42
2,779,000
20.34
19-Nov-09
20.51
20.60
20.15
20.23
3,153,300
20.15
18-Nov-09
20.67
20.75
20.46
20.62
3,366,800
20.54
17-Nov-09
20.54
20.79
20.50
20.73
2,504,800
20.65
16-Nov-09
20.27
20.67
20.23
20.64
4,489,000
20.56
13-Nov-09
20.18
20.37
20.00
20.23
3,474,500
20.15
12-Nov-09
20.29
20.47
20.11
20.14
3,220,500
20.06
11-Nov-09
20.09
20.29
19.97
20.27
3,458,000
20.19
10-Nov-09
19.79
20.09
19.62
20.03
3,429,000
19.95
9-Nov-09
19.84
20.12
19.77
20.10
2,973,900
20.02
6-Nov-09
19.60
19.73
19.49
19.72
3,231,500
19.64
5-Nov-09
19.11
19.87
19.11
19.72
7,675,000
19.64
4-Nov-09
19.04
19.36
18.93
19.11
5,034,900
19.04
3-Nov-09
18.88
19.00
18.85
18.99
5,151,700
18.92
2-Nov-09
19.12
19.23
18.75
18.94
6,168,400
18.87
30-Oct-09
19.42
19.48
18.97
19.07
7,210,100
19.00
29-Oct-09
19.10
19.78
19.08
19.60
10,382,400
19.52
28-Oct-09
20.14
20.30
18.94
19.02
8,666,100
18.95
27-Oct-09
19.84
20.21
19.74
20.02
5,150,600
19.94
26-Oct-09
19.94
20.34
19.87
19.94
4,289,800
19.86
23-Oct-09
20.65
20.65
19.90
19.98
3,740,500
19.90
22-Oct-09
20.62
20.65
20.17
20.55
2,659,200
20.47
21-Oct-09
20.55
20.89
20.45
20.54
3,005,800
20.46
20-Oct-09
21.08
21.11
20.45
20.54
3,148,900
20.46
19-Oct-09
20.95
21.25
20.86
21.13
3,800,700
21.05
16-Oct-09
21.04
21.05
20.83
20.94
2,535,100
20.86
15-Oct-09
20.94
21.13
20.89
21.11
2,577,300
21.03
14-Oct-09
21.00
21.11
20.74
21.05
3,047,400
20.97
13-Oct-09
20.89
21.01
20.54
20.92
3,717,700
20.84
12-Oct-09
20.91
21.19
20.84
20.91
2,202,700
20.83
9-Oct-09
20.79
20.98
20.74
20.94
2,096,000
20.86
8-Oct-09
20.98
21.06
20.72
20.85
2,825,100
20.77
7-Oct-09
20.97
21.00
20.71
20.93
2,529,600
20.85
6-Oct-09
21.00
21.11
20.76
20.95
3,373,300
20.87
5-Oct-09
20.56
20.96
20.39
20.96
3,507,200
20.88
2-Oct-09
20.27
20.64
20.07
20.58
3,896,300
20.50
1-Oct-09
21.22
21.23
20.53
20.56
5,159,100
20.48
30-Sep-09
20.98
21.44
20.72
21.41
4,954,800
21.33
29-Sep-09
21.07
21.15
20.93
21.03
2,439,000
20.95
28-Sep-09
20.92
21.16
20.83
21.02
2,258,400
20.94
25-Sep-09
21.00
21.13
20.86
20.90
1,981,800
20.82
24-Sep-09
21.14
21.25
20.85
21.01
2,772,600
20.93
23-Sep-09
21.02
21.42
21.02
21.11
4,214,200
21.03
22-Sep-09
21.03
21.08
20.79
20.94
2,747,900
20.86
21-Sep-09
21.10
21.15
20.87
20.97
4,250,300
20.89
18-Sep-09
21.12
21.17
20.85
21.15
4,861,500
21.07
17-Sep-09
21.14
21.14
20.76
20.99
4,785,000
20.91
16-Sep-09
20.90
20.90
20.31
20.76
3,932,100
20.68
15-Sep-09
20.71
20.89
20.53
20.87
3,186,700
20.79
14-Sep-09
20.33
20.76
20.18
20.75
3,813,400
20.67
11-Sep-09
20.43
20.52
20.22
20.45
2,822,800
20.37
10-Sep-09
20.12
20.38
20.00
20.37
5,223,600
20.29
9-Sep-09
20.49
20.49
19.83
20.10
5,783,700
20.02
9-Sep-09
$ 0.08 Dividend
8-Sep-09
20.38
20.51
20.29
20.50
4,232,400
20.34
4-Sep-09
20.26
20.47
20.15
20.32
2,756,800
20.16
3-Sep-09
20.15
20.32
19.92
20.30
2,937,400
20.14
2-Sep-09
19.87
20.14
19.75
20.04
4,132,300
19.88
Coca-Cola has paid uninterrupted dividends on its common stock since 1893 and increased payments
to common shareholders every year for 47 years.
From the end of 1998 up until December 2008 this dividend growth stock has delivered a negative
annual average total return of 2.10% to its shareholders. The stock has largely traded between $65 and
$40 over the past decade.
The company has managed to deliver a 10.90% average annual increase in its EPS between 1999 and
2008. Analysts are expecting an increase in EPS to $3.05-$3.10 for 2009 and $3.25-$3.30 by 2010.
This would be a nice increase from the 2008 earnings per share of $2.49. Future drivers for earnings
could be the companys tea, coffee and water operations. Cost savings initiatives could also add to the
bottom line over time.
Some analysts believe that Coca Cola could follow arch rival Pepsi Cos (PEP) moves to acquire its
own bottlers in an effort to gain more control over the production and distribution of its beverages in
key markets. Coke holds a 35% interest in its largest manufacturer and distributor of Coca Cola
products, Coca-Cola Enterprises In. (CCE). Coca-Cola Enterprises Inc. accounts for about 40% of
Cokes concentrate sales and 16% of the companys worldwide volume, which makes it a likely target
of acquisition, should Coca Cola decide to follow Pepsi Cos strategy of buying back its bottling
operations.
The Return on Equity has been in a decline after hitting a high in 2001. Rather than focus on absolute
values for this indicator, I generally want to see at least a stable return on equity over time.
Annual dividends have increased by an average of 10.10% annually since 1999, which is slightly
lower than the growth in EPS. The company last raised its dividend by 8% in February 2009, for the
47th year in a row.
A 10 % growth in dividends translates into the dividend payment doubling every seven years. If we
look at historical data, going as far back as 1969, The Coca Cola Company has indeed managed to
double
its
dividend
payment
every
seven
years
on
average.
The dividend payout ratio remained above 50% for the majority of the past decade. A lower payout is
always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-
term
fluctuations
in
earnings.
Currently Coca Cola is trading at 20 times earnings and yields 3.30%. In comparison arch rival in the
cola wars Pepsi Co trades at a P/E multiple of 16.5 and yields 3.40%. Check my analysis of Pepsi Co.
I believe that The Coca Cola Company is not as attractively valued at the moment as Pepsi Co. I
would consider adding to my position there if it can cover its dividends at least two times by its
earnings by the end of the year, and if the P/E ratio doesnt increase above 20.
COCA COLA ENTERPRISES INC Dividends & Splits
5 Year Dividend History
Payable
Amount/Share
Ex-Date
Record
Declaration
12/10/2009
$0.08
11/24/2009
11/27/2009
10/28/2009
09/24/2009
$0.08
09/09/2009
09/11/2009
07/30/2009
06/25/2009
$0.07
06/10/2009
06/12/2009
04/22/2009
03/26/2009
$0.07
03/11/2009
03/13/2009
02/11/2009
12/11/2008
$0.07
11/25/2008
11/28/2008
10/23/2008
09/25/2008
$0.07
09/10/2008
09/12/2008
07/23/2008
06/26/2008
$0.07
06/11/2008
06/13/2008
04/23/2008
03/27/2008
$0.07
03/12/2008
03/14/2008
02/15/2008
12/13/2007
$0.06
11/28/2007
11/30/2007
10/25/2007
09/27/2007
$0.06
09/12/2007
09/14/2007
07/24/2007
06/28/2007
$0.06
06/13/2007
06/15/2007
04/25/2007
03/29/2007
$0.06
03/14/2007
03/16/2007
02/10/2007
12/14/2006
$0.06
11/29/2006
12/01/2006
10/26/2006
09/28/2006
$0.06
09/13/2006
09/15/2006
07/26/2006
06/29/2006
$0.06
06/14/2006
06/16/2006
04/26/2006
03/30/2006
$0.06
03/15/2006
03/17/2006
02/18/2006
12/15/2005
$0.04
11/30/2005
12/02/2005
10/26/2005
10/03/2005
$0.04
09/15/2005
09/19/2005
07/27/2005
07/01/2005
$0.04
06/15/2005
06/17/2005
04/27/2005
Payable
Amount/Share
Ex-Date
Record
Declaration
04/01/2005
$0.04
03/16/2005
03/18/2005
02/16/2005
Dividend Analysis
Looking at the last 5 years of dividends, I have calculated an average high
dividend yield of 1.97%. However, that seems a tad low considering that each of
the last 2 years is significantly higher than that amount. If I average out just the
last 4 years of high dividend yields, I come up with 2.73%. Still lower than the
average high yield of the last 2 years.
And now the dividend payout ratio. Ah ha! This explains how they were able to
increase dividends at 10% even when the fundamentals have not been growing
as quickly. Look at the increase in the payout ratio. It has grown from a low of
34.15% in 1997 to a high of 57.14% in 2006! It has just been a steady climb up
for the last 10 years.
Using the 2.73% as an average high dividend yield, I calculate a price of $49.82
to be able to collect this average high dividend yield. At close of Friday, the
current price was $52.80. That means a premium of 5.99% over the price I am
willing to pay.
Conclusion:
Well, my analysis shows that Coca-Cola fundamentals have not been keeping up
with their very healthy dividend growth. This has caused Coca-Cola to have to
payout more and more of its earnings to shareholders. This concerns me
because eventually, they will not be able to raise their dividend at these high
rates because their dividend payout ratio will be too high.
I am sure that Warren Buffett is earning a healthy dividend on his KO stocks, but
personally, I would pass on this one today. There are stocks out there that
continue to grow their fundamentals which will in turn allow them to grow their
dividends.
Sym
bol
Company Name
Chang %
Volum
Chart
Last e
Change e
Newss
CCE
-0.55
3.47 M
PBG
38.19 -0.28
-0.73
3.10 M
PEP
PEPSICO INC
62.76 -0.89
-1.40
6.40 M
Pepsi
Pepsi
Type
Cola
Manufacturer
PepsiCo.
Country of origin
United States
Introduced
1898
June
16,
1961 (as Pepsi)
Related products
Coca-Cola
Fanta
Dr
Sprite
Irn
Cola
Big Cola
(as
1903
Brad's
(as
(soft
Drink)
Pepsi-Cola)
Pepper
drink)
Bru
Turka
History
Pepsi is a carbonated soft drink produced and manufactured by PepsiCo. It is sold in many places
such as retail stores, restaurants, schools, cinemas and from vending machines. The drink was first
made in the 1890s by pharmacist Caleb Bradham in New Bern, North Carolina. The brand was
trademarked on June 16, 1903. There have been many Pepsi variants produced over the years since
1898.
In October 2008, Pepsi announced that it would be redesigning its logo and re-branding many of its
products by early 2009. In 2009, Pepsi, Diet Pepsi and Pepsi Max began using all lower-case fonts for
name brands, and Diet Pepsi Max was re-branded as Pepsi Max. The brand's blue and red globe
trademark became a series of "smiles," with the central white band arcing at different angles
depending on the product. Pepsi in countries such as the U.S., Canada, Brazil, Bolivia, Guatemala,
Nicaragua, Honduras, El Salvador, Colombia, Argentina, Puerto Rico and Australia is carrying the
"smile" logo, while the rest of the countries continue to use the old design on all packaging.
In mid-September 2009,the new logo has started to appear on 300 and 600ml bottles of Pepsi in
Australia. Pepsi Max bottles still carry the current logo as of 27th September.
Large Block Holder Type
Number
Institutions
1,764
Mutual Fund
2,759
Other Major
25
Total Number
Block Holders
of
Large 4,548
Record
Declaration
12/04/09
11/13/09
Set Alert
Record
Declaration
01/04/2010 $0.45
12/02/2009
12/04/2009
11/16/2009
09/30/2009 $0.45
09/02/2009
09/04/2009
08/13/2009
06/30/2009 $0.45
06/03/2009
06/05/2009
05/06/2009
03/31/2009 $0.425
03/04/2009
03/06/2009
02/07/2009
01/02/2009 $0.425
12/03/2008
12/05/2008
11/17/2008
09/30/2008 $0.425
09/03/2008
09/05/2008
07/19/2008
06/30/2008 $0.425
06/04/2008
06/06/2008
05/08/2008
03/31/2008 $0.375
03/05/2008
03/07/2008
02/02/2008
01/02/2008 $0.375
12/05/2007
12/07/2007
11/17/2007
09/28/2007 $0.375
09/05/2007
09/07/2007
07/20/2007
06/29/2007 $0.375
06/06/2007
06/08/2007
05/09/2007
03/30/2007 $0.30
03/07/2007
03/09/2007
02/03/2007
01/02/2007 $0.30
12/06/2006
12/08/2006
11/18/2006
09/29/2006 $0.30
09/06/2006
09/08/2006
07/22/2006
06/30/2006 $0.30
06/07/2006
06/09/2006
05/04/2006
03/31/2006 $0.26
03/08/2006
03/10/2006
02/04/2006
01/03/2006 $0.26
12/07/2005
12/09/2005
11/19/2005
09/30/2005 $0.26
09/07/2005
09/09/2005
07/23/2005
06/30/2005 $0.26
06/08/2005
06/10/2005
05/05/2005
03/31/2005 $0.23
03/09/2005
03/11/2005
01/28/2005
Q3
FY09
Q2 FY09
Q1 FY09
Q4 FY08
Net Sales/Revenues
11.08 B
10.59 B
8.26 B
12.73 B
11.24 B
4.52 B
3.44 B
6.17 B
4.90 B
Depreciation,
Amortization
371.00 M 314.00 M
21.00 M
377.00 M
5.90 B
5.70 B
4.51 B
6.54 B
5.96 B
3.50 B
2.90 B
5.32 B
3.98 B
1.61 B
1.44 B
1.52 B
1.42 B
Depletion
Gross Income
and 422.00
M
1.57 B
Q3 FY08
Period Ending
Q3
FY09
Q2 FY09
Q1 FY09
Q4 FY08
Net Sales/Revenues
11.08 B
10.59 B
8.26 B
12.73 B
11.24 B
Operating Income
2.23 B
2.20 B
1.61 B
1.21 B
1.98 B
93.00 M
0.00
0.00
0.00
0.00
0.00
209.00 M 91.00 M
908.00 M
176.00 M
0.00
0.00
0.00
0.00
16.00 M
424.00 M 2.00 M
908.00 M
192.00 M
Pretax Income
2.16 B
2.12 B
1.08 B
1.92 B
Income Taxes
575.00
M
568.00 M 374.00 M
293.00 M
550.00 M
Minority Interest
16.00 M
8.00 M
6.00 M
0.00
0.00
Equity in Earnings
0.00
0.00
0.00
0.00
0.00
Discontinued Operations
0.00
0.00
0.00
0.00
0.00
1.66 B
1.14 B
719.00 M
1.58 B
0.00
0.00
0.00
0.00
Net Income
Dividends
1.66 B
1.14 B
719.00 M
1.58 B
1.00 M
3.00 M
0.00
2.00 M
1.72 B
1.66 B
1.14 B
719.00 M
1.57 B
Period Ending
FY2008
FY2007
FY2006
FY2005
Net Sales/Revenues
43.25 B
39.47 B
35.14 B
32.56 B
29.26 B
16.67 B
14.52 B
13.02 B
12.29 B
Depreciation,
Amortization
1.43 B
1.41 B
1.31 B
1.26 B
19.21 B
18.24 B
15.71 B
14.11 B
12.77 B
12.31 B
10.30 B
Net
Income
Before
Items/Preferred Div
Before
Extra 1.72 B
Preferred 1.72 B
Depletion
and 1.54 B
Gross Income
Selling, General
Expenses
0.00
22.92 B
&
Admin 15.45 B
21.38 B
0.00
1.49 B
Q3 FY08
FY2004
0.00
0.00
0.00
0.00
0.00
1.57 B
1.61 B
1.44 B
1.52 B
1.42 B
Operating Income
7.48 B
7.27 B
6.44 B
5.92 B
5.41 B
0.00
0.00
0.00
0.00
0.00
Period Ending
Q3
FY09
Q2 FY09
Q1 FY09
Q4 FY08
Net Sales/Revenues
11.08 B
10.59 B
8.26 B
12.73 B
11.24 B
Q3 FY08
543.00
M
102.00 M 150.00 M
206.00 M
41.00 M
125.00 M 173.00 M
159.00 M
74.00 M
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
6.61 B
6.08 B
5.33 B
7.30 B
343.00
M
245.00 M 255.00 M
261.00 M
169.00 M
Interest Capitalized
14.00 M
21.00 M 16.00 M
5.00 M
2.00 M
Pretax Income
6.65 B
7.07 B
6.37 B
5.82 B
5.17 B
Income Taxes
1.88 B
1.97 B
1.35 B
2.30 B
1.37 B
902.00
M
1.53 B 832.00 M
1.76 B
1.10 B
732.00
M
489.00 569.00 M
M
426.00 M
256.00 M
314.00
M
24.00 M -38.00 M
148.00 M
12.00 M
-69.00
M
-66.00 -16.00 M
M
-26.00 M
5.00 M
0.00
0.00
0.00
Minority Interest
0.00
0.00
Equity in Earnings
374.00
M
560.00 M 616.00 M
557.00 M
380.00 M
0.00
0.00
0.00
0.00
0.00
Discontinued Operations
0.00
0.00
0.00
0.00
38.00 M
5.64 B
4.08 B
4.21 B
0.00
0.00
0.00
5.64 B
4.08 B
4.21 B
18.00 M
25.00 M
4.08 B
4.21 B
Net
Income
Before
Items/Preferred Div
Extra 5.14 B
Before
Preferred 5.14 B
10.00 M
5.14 B
5.66 B
0.00
5.66 B
12.00 M 11.00 M
5.66 B
5.64 B
Returns
Jan
Increased
#Times PEP Stock Price
0
Unchanged
#Times PEP Stock Price
52
Decreased
2009 %
-8.28
2008 %
-10.15
2007 %
4.30
2006 %
-3.21
2005 %
2.87
2004 %
Jul
Nov Dec
51
52
52
50
61
47
53
44
59
47
54
-4.15
2.01
-3.19
3.38
0.30
6.94
3.86
0.65
-2.22
-1.53
-3.33
-5.14
3.98
0.78
4.92
4.60
-0.33
3.39
3.81
1.11
5.59
-6.89
-5.08
-0.68
-4.13
3.26
4.67
1.19
5.56
1.11
-0.13
2.88
3.67
3.00
0.59
3.51
4.07
7.69
-0.02
3.39
3.22
-20.00
0.63
-2.78
4.27
2.76
-0.53
4.69
-2.31
0.12
-3.39
-1.65
0.94
-0.19
4.59
At the same time company has managed to deliver a 9.90% average annual increase in its EPS since
1999.
The ROE has remained largely between 31% and 38%, with the exception of 2004, when it fell to as
low
as
22%.
Annual dividend payments have increased by an average of 13.50% annually since 1999, which is
much higher than the growth in EPS. Analysts are expecting slight increase in EPS for 2009
compared to 2008, given the sluggish state of North American economies. The strong US dollar could
potentially hurt sales, as over 44% of PepsiCos revenues are derived internationally.
A 13.50 % growth in dividends translates into the dividend payment doubling almost every five years.
Since 1978 PepsiCo has actually managed to double its dividend payment every six years on average.
The dividend payout has remained in a range between 31% and 42%. In 2008 the dividend payout
ratio has surged to 51%. A lower payout is always a plus, since it leaves room for consistent dividend
growth minimizing the impact of short-term fluctuations in earnings. The slow growth in earnings
could
put
future
dividend
increases
at
risk.
PepsiCo is currently attractively valued. The stock trades at a price/earnings multiple of 15, has an
adequately covered dividend payout and the current dividend yield at 3.50%, which is above the
minimum
threshold
that
I
have
set.
PepsiCo, Inc. (PepsiCo) is a global snack and beverage company. The Company manufactures,
markets and sells a range of salty, convenient, sweet and grain-based snacks, carbonated and noncarbonated
beverages
and
foods.
Symb
ol
Company Name
Chang %
Last e
Change VolumeNews Charts
PEP
PEPSICO INC
62.76 -0.89
-1.40
6.40 M
KO
COCA COLA CO
57.27 -0.69
-1.19
10.12 M
DPS
DR
PEPPER
GROUP INC
SNAPPLE26.71 -0.19
-0.71
1.41 M
KFT
26.42 -0.19
-0.71
6.76 M
1.
2.
3.
4.
5.
PEP earned two Stars in this section for 2.) and 3.) above. PEP earned a Star as a result of its most
recent Debt to Total Capital being less than 45%. PEP earned a Star for having an acceptable score in
at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders
every year since 1952 and has increased its dividend payments for 37 consecutive years.
Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if
you could earn a better return in a much less risky money market account (MMA)? This section
compares the earning ability of this stock with a high yield MMA. Two items are considered in this
section, see page 2 of the linked PDF for a detailed description:
1. NPV MMA Diff.
2. Years to > MMA
PEP earned a Star in this section for its NPV MMA Diff. of the $796. This amount is in excess of the
$500 target I look for in a stock that has increased dividends as long as PEP has. If PEP grows its
dividend at 7.6% per year, it will take 4 years to equal a MMA yielding an estimated 20-year average
rate of 3.9%. PEP earned a check for the Key Metric Years to >MMA since its 4 years is less than
the 5 year target.
Other: PEP is a member of the S&P 500, a Dividend Aristocrat and a member of the Broad Dividend
Achievers Index. PEPs global market positions and stable end markets produce consistent and
strong cash flows. The company continues to find domestic and international growth opportunities.
Compared to it peers, PEPs product innovation strategy is considered trend-setting for the industry.
Though carbonated soft drinks remain the most popular beverage, PEP recognizes that noncarbonated soft drinks are a faster growing category. The company is focusing on the health and
wellness trends. It has eliminated trans fats from many of its snack foods, and is introducing good
foryou foods under the Quaker Oats brand. Risks include the highly competitive and very mature
nature of it products, also with more exposure to foreign markets, political and currency risks also
increase.
Conclusion: PEP did not earn any Stars in the Fair Value section, earned two Stars in the Dividend
Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a total of
three Stars. This quantitatively ranks PEP as a 3 Star-Hold.
Using my D4L-PreScreen.xls model, I determined the share price could increase to $65.62 before
PEPs NPV MMA Differential fell to the $500 that I like to see for a stock with 37 consecutive years
of dividend increases. At that price the stock would yield 2.70%.
Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate
the target $500 NPV MMA Differential, the calculated rate is 6.3%. This dividend growth rate is
lower than the the 7.6% used in this analysis, thus providing a margin of safety. PEP has a risk rating
of 1.00 which classifies it as a low risk stock.
Like its competition Coca-Cola (KO), PEPs Free Cash Flow Payout, currently at 70%, tends to
remain higher than the 60% level that I prefer. However, this is mitigated to an extent by relatively
low debt levels and predictable cash flows. PEP is a stock I will buy, as my allocation allows and
when it dips below its buy price of $55.10. For additional information, including the stocks dividend
history, please refer to its data page.
Stock price of last five years with monthly price list
PRICES
Date
Open
High
Low
Close
Volume
Adj Close*
4-Dec-09
63.18
64.00
63.08
63.85
8,907,000
63.85
3-Dec-09
63.58
63.59
62.67
62.76
6,406,200
62.76
2-Dec-09
63.50
63.74
63.17
63.65
6,195,800
63.65
2-Dec-09
$ 0.45 Dividend
1-Dec-09
62.68
63.93
62.49
63.87
6,887,700
63.42
30-Nov-09
62.64
62.83
62.15
62.22
7,252,700
61.78
27-Nov-09
62.24
62.55
61.75
62.30
3,416,000
61.86
25-Nov-09
62.53
63.27
62.49
63.19
4,672,600
62.74
24-Nov-09
62.62
62.65
62.13
62.50
4,139,700
62.06
23-Nov-09
62.46
62.99
62.26
62.49
5,009,400
62.05
20-Nov-09
61.67
62.31
61.43
62.08
5,314,600
61.64
19-Nov-09
62.10
62.10
61.35
61.88
4,390,400
61.44
18-Nov-09
62.44
62.51
61.81
62.30
3,952,300
61.86
17-Nov-09
62.42
62.63
62.03
62.60
4,362,400
62.16
16-Nov-09
62.21
62.49
61.94
62.43
4,966,800
61.99
13-Nov-09
61.63
62.13
61.35
61.94
6,411,100
61.50
12-Nov-09
62.49
62.75
61.10
61.27
8,474,900
60.84
11-Nov-09
62.34
62.68
62.08
62.60
4,714,300
62.16
10-Nov-09
62.17
62.94
61.93
62.08
7,094,100
61.64
9-Nov-09
61.81
62.32
61.43
62.28
6,921,800
61.84
6-Nov-09
60.99
61.76
60.79
61.76
4,831,000
61.32
5-Nov-09
60.44
61.41
60.42
61.23
5,578,500
60.80
4-Nov-09
60.16
60.96
59.79
60.38
5,552,100
59.95
3-Nov-09
60.29
60.39
59.62
60.06
5,797,000
59.64
2-Nov-09
60.79
61.07
60.16
60.60
6,618,800
60.17
30-Oct-09
61.35
61.64
60.37
60.55
7,794,100
60.12
29-Oct-09
61.01
61.46
60.57
61.39
5,245,300
60.96
28-Oct-09
60.88
61.52
60.75
60.99
6,321,900
60.56
27-Oct-09
60.64
61.35
60.10
61.00
7,262,900
60.57
26-Oct-09
61.14
61.50
60.21
60.47
5,113,000
60.04
23-Oct-09
61.41
61.67
60.58
61.03
6,505,200
60.60
22-Oct-09
61.90
61.90
60.87
61.50
5,428,100
61.07
21-Oct-09
61.38
62.34
61.23
61.84
7,445,000
61.40
20-Oct-09
62.00
62.05
61.12
61.58
8,068,000
61.15
19-Oct-09
62.28
62.57
61.90
62.05
5,557,300
61.61
16-Oct-09
62.47
62.68
62.11
62.29
6,588,400
61.85
15-Oct-09
61.57
62.75
61.39
62.68
10,518,600
62.24
14-Oct-09
60.94
61.68
60.70
61.62
8,462,200
61.19
13-Oct-09
60.88
61.00
60.52
60.60
7,502,000
60.17
12-Oct-09
60.43
61.36
60.25
60.92
6,178,100
60.49
9-Oct-09
60.38
60.70
59.81
60.59
6,360,200
60.16
8-Oct-09
61.24
61.24
59.80
60.39
17,263,400
59.96
7-Oct-09
60.85
61.38
60.45
61.17
6,441,900
60.74
6-Oct-09
61.05
61.27
60.42
60.87
8,128,900
60.44
5-Oct-09
60.83
61.24
60.14
60.85
7,892,000
60.42
2-Oct-09
59.12
61.24
58.93
60.90
17,530,200
60.47
1-Oct-09
58.70
58.99
58.27
58.46
9,010,200
58.05
30-Sep-09
58.74
58.86
58.01
58.66
8,898,400
58.25
29-Sep-09
59.10
59.31
58.00
58.51
7,086,400
58.10
28-Sep-09
58.95
59.49
58.62
59.03
4,085,900
58.61
25-Sep-09
58.50
59.13
58.32
58.68
6,758,800
58.27
References:
1. http://www.coca-cola.com/index.jsp
2. http://finance.aol.com/quotes/the-coca-cola-company/ko/nys
3. http://finance.aol.com/event/the-pepsi-bottling-group-inc/pbg/nys
4. http://finance.yahoo.com/q?s=ko
5. http://www.dividendgrowthinvestor.com/2009/06/coca-cola-ko-dividendstock-analysis.html
6. http://finance.yahoo.com/q?s=ko
7. http://moneycentral.msn.com/detail/stock_quote?Symbol=Ko