Coca-Cola stock (NYSE: KO) has seen a 3% rise this year, far better than the broader S&P500 index, which is down 18%. However, in the longer term, KO stock is up 33% from levels seen in late 2017, underperforming the S&P 500 index, up 47%.
This 33% growth for KO stock since late 2017 can primarily be attributed to 1. the company’s P/S ratio rising 17% to 6.4x trailing revenues, from 5.5x in 2017, 2. Coca-Cola’s revenue growth of 14% to $41.3 billion over the last twelve months, compared to $36.2 billion in 2017, slightly offset by 3. a 0.6% rise in its total shares outstanding. This has meant that the company’s revenue per share rose 13% to $9.54 now, compared to $8.41 in 2017. Our dashboard on Why Coca-Cola Stock Moved has more details.
Although Coca-Cola saw its sales decline in 2020 owing to the impact of the pandemic, it has recovered strongly, driven by a rise in the number of social events, restaurants back to full-scale operations, and, more importantly, people venturing out. The company takes pricing action periodically, which has also aided its revenue and margin growth over recent years. This trend is expected to continue going forward. However, the U.S. economy is feared to see a slowdown in the near term due to higher inflation and rising interest rates. This, clubbed with the impact of higher food and oil prices on consumer sentiment, may weigh on the near-term sales growth for beverage companies, including Coca-Cola. For instance, people earning less than $50,000 annually in the U.S. cut their spending by 1% over the last year. 
Despite the near-term headwinds, the company expects its organic top-line growth to be 12% to 13% for the full-year 2022. However, with costs also increasing, it expects earnings per share to rise only 5% to 6% y-o-y. Coca-Cola has seen its operating margins expand to 31.4% currently vs. 26.7% in 2017. The operating margins were even higher at 34.5% in 2021, but the rising costs over the past few quarters have pushed the metric lower. Coca-Cola’s Operating Income Comparison has more details. Rising revenues and margin expansion bolstered the company’s earnings to $2.32 in 2021, compared to $1.91 in 2017, on a per share and adjusted basis, reflecting a 21.4% growth.
We estimate Coca-Cola’s valuation to be $70 per share, reflecting a 14% upside from its current levels of $61. This represents a forward P/E multiple of 27x for the company based on our 2022 EPS forecast of $2.50, and it compares with the last three-year average of 25x.
While KO stock looks like it has some more room for growth, it is helpful to see how Coca-Cola’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.
|S&P 500 Return||-1%||-18%||75%|
|Trefis Multi-Strategy Portfolio||-3%||-18%||225%|
 Month-to-date and year-to-date as of 9/7/2022
 Cumulative total returns since the end of 2016