PEP) trade at less than fair market value. That's not to say that Coca-Cola is not a great buy today. But with second-quarter earnings on tap for Tuesday, July 16, value-oriented investors have to understand what they are paying for. In the April quarter, for example, although Coca-Cola overcame some challenges, there were also plenty of noticeable room for improvement. Although the company did an excellent job growing volumes worldwide by 4%, which beat expectations, revenue still fell 1% year over year to $11.04 billion. There were noticeable pressures in the company's prices and product mix.
The point is, as with other dominant brands like McDonald's ( MCD) and Nike ( NKE), Coca-Cola has shown an uncanny ability to "struggle" and still grow market share at the same time. And there's clearly a direct relation to the Street's willingness to pay a premium for this sort of quality or "safety." Today, due to recent obesity concerns regarding sugary beverages and increasing regulatory pressure, Coca-Cola faces a new kind of challenge -- one that has affected soda consumption over the past decade. The company is not taking this lying down, however. By announcing Coca-Cola Life, management is showing that it is serious about changing Coca-Cola's nutritional profile. Coca-Cola Life is a new drink that the company hopes will be embraced by consumers as it will be sweetened using a blend of sugar and Stevia, a plant-based sweetener that has no calories. Although the company has used Stevia in other products, this is the first time Stevia will be added to a dominant Coke drink. DPS), which has posted an average P/E of 9 during that same span. Value-oriented investors should expect this trend to continue. And with or without Stevia, Coca-Cola is still sweet at this price. Shares of Coca-Cola were trading at $41.06 Monday morning. At the time of publication, the author held no positions in any of the stocks mentioned. Follow @saintssense This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.