Coca-Cola: Hard To Swallow At Today's Valuation

Value-oriented investors bought in at much lower multiples during each of those intervening years (see green starred periods). Buying wisely, at lower-than-average P/Es and higher-than-average yields, paid off decently, though not spectacularly considering overall market action.

At last week’s closing quote of $43.03 Coke’s P/E was more extended than it was in 2013 and almost as high as it was pre-crash in 2008.

A regression to a normalized 18 multiple would only support a target price of $36.72. Price the stock to yield a typical 2.96% and you could see $41.22 as a logical goal. Based on the backward looking 52-week range plus the lack of earnings progress, neither number seems out of touch with reality.

Read More at: GuruFocus.

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