Why KDP Could Outperform Coca-Cola Stock
KDP is Coca-Cola’s peer in Soft Drinks & Non-alcoholic Beverages industry that has:
1) Lower valuation (P/OpInc) compared to Coca-Cola stock
2) But higher revenue and operating income growth
This disconnect between valuation and performance could mean that you are better off buying KDP stock vs. KO stock
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Key Metrics Compared
| Metric | KO | KDP |
|---|---|---|
| P/OpInc* | 22.5x | 10.7x |
| LTM OpInc Growth | 6.3% | 10.4% |
| 3Y Avg OpInc Growth | 7.4% | 9.6% |
| LTM Revenue Growth | 1.9% | 8.2% |
| 3Y Avg Revenue Growth | 3.7% | 5.7% |
OpInc = Operating Income, P/OpInc = Price To Operating Income Ratio
But do these numbers tell the full story? Read Buy or Sell KO Stock to see if Coca-Cola still has an edge that holds up under the hood. As a quick background, Coca-Cola (KO) provides sparkling soft drinks, flavored waters, sports drinks, juices, dairy and plant-based beverages, tea, coffee, and energy drinks through a global network of bottlers and distributors.
This is just one approach to evaluate investments. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure
Is The Mismatch In Stock Price Temporary
One way to check if Coca-Cola stock is expensive now versus the other tickers would be to see how these metrics compared across companies exactly a year ago. Specifically, if there has been a marked reversal in the trend for Coca-Cola in the last 12 months, then there is a chance that the current mismatch is likely to reverse. On the other hand, a persistent underperformance in revenue and operating income growth for Coca-Cola would reinforce the conclusion that the stock is expensive compared to its peers, but may not revert soon
Key Metrics Compared 1 Yr Prior
| Metric | KO | KDP |
|---|---|---|
| P/OpInc* | 19.6x | 12.6x |
| LTM OpInc Growth | 10.2% | 0.1% |
| 3Y Avg OpInc Growth | 7.9% | 9.4% |
| LTM Revenue Growth | 2.8% | 6.8% |
| 3Y Avg Revenue Growth | 4.0% | 5.9% |
OpInc = Operating Income
Additional Metrics To Consider
| Metric | KO | KDP |
|---|---|---|
| P/S | 7.0x | 2.4x |
| Market Cap (Current) | $ 336.1 Bil | $ 39.2 Bil |
| LTM Revenue | $ 47.94 Bil | $ 16.60 Bil |
| LTM Opinc | $ 14.91 Bil | $ 3.65 Bil |
| LTM Op Margin | 31.1% | 22.0% |
OpInc = Operating Income
Alternate buying based on valuation, while attractive, needs to be evaluated carefully from multiple angles. Such multi-factor analysis is exactly how we construct Trefis portfolio strategies. If you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the its benchmark – a combination of S&P 500, Russell, and S&P midcap index.