8. Coca-Cola (KO)

10-Year EBITDA Growth Rate:  9.30%

Warren Buffett's Portfolio Weighting at of 12-31-2013:  15.8%

Value of Holdings:  $16.524 billion

Coca-Cola  (KO) is a nonalcoholic beverage company offering a wide variety of drinks including soda, water, enhanced water, ready to drink teas and coffee, juices and juice drinks as well as sports and energy drinks.

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TheStreet Ratings team rates COCA-COLA CO as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate COCA-COLA CO (KO) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its expanding profit margins, good cash flow from operations, reasonable valuation levels and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for COCA-COLA CO is rather high; currently it is at 65.74%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 15.48% trails the industry average.
  • Net operating cash flow has remained constant at $2,830.00 million with no significant change when compared to the same quarter last year. In addition, COCA-COLA CO has modestly surpassed the industry average cash flow growth rate of -5.22%.
  • COCA-COLA CO's earnings per share declined by 7.3% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, COCA-COLA CO reported lower earnings of $1.90 versus $1.96 in the prior year. This year, the market expects an improvement in earnings ($2.10 versus $1.90).
  • KO, with its decline in revenue, slightly underperformed the industry average of 3.9%. Since the same quarter one year prior, revenues slightly dropped by 3.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: KO Ratings Report
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