Attached.

Report objective
This report analysis the market value of Coca-Cola company and try to find its intrinsic value. The
intrinsic value defines the amount an investor is willing and able to pay for an investment in the
company. The intrinsic value is key investment measure. The intrinsic value will be calculated using the
growth model and the appropriate beta and discount rates. Therefore, the main objective of this report
will be to find the intrinsic value of the firm and compare the same value with market value at which the
company is trading at in stock market. An investment decision will be recommended based on the two
stock value comparisons.
Firm overview
Coca-Cola Company is one of the firms which is publicly traded at Dow Jones Industrial Average. CocaCola Company is an American firm which is publicly traded and it deals with the manufacture, retailing
8and marketing on non-alcoholic beverage concentrates. The company was incorporated in 1886 by
John Stith in Atlanta, Georgia. The company owns Coca-Cola refreshments, an anchor bottler which is
based in North America. The company’s stock is listed in the NYSE stock market and it has a Russell of
1000 growth stock index. In the previous accounting period (2017) the company reported a profit of
1,248 million dollars with a revenue of 35,410 million dollars. The company has an average of 61,800
employees across its branches. The 2017 price per share came at $42.6 an increase from 2016, where it
reported a share price of $40.63.
Industry analysis
There are two major industries under which Coca-Cola Company is operating at. The company falls in
the soft drinks and bottled water industry. A market analysis done in 2003 indicated that Coca-Cola
Company holds a 43% in the market share for its soft drinks industry. Soft drinks industry is a major
growing industry and it has been attributed by a growth in its sales volume. As a result, there has been a
decrease in the carbonated drinks buy around 50% of the total products presented to market. This has
been attributed by the increasing health concerns by many consumers and thus switching to less
carbonated drinks and water in general. In response to the less carbonated drinks, the firms have
adopted new products which meet the consumers’ specifications in increase their market demand but
this has become a great challenge for the firms. For example, in 2002 Coca-Cola Company developed a
new product of Vanilla Coke, which was seen to be unsuccessful in the attempt of increasing its demand.
However, with the decreased sales volume of soft drinks, the company has realized a favorable market
trend with its diet soft drinks. These diet soft drinks have been a major category of products for growth
in Coca-Cola Company.
The second category for Coca-Cola Company industry is the bottled water industry. Coca-Cola Company
has 12 brands related to bottled water with the famous brand being Dasani. This is the industry that has
been experiencing rapid growth in favor of Coca-Cola Company. The growth in demand has been
attributed by the increased health concern by the consumers who prefer bottled water than the soft
drinks. In addition, the bottled water has experienced growth as a result of several incidents reported by
health institutions concerning the contaminated municipal water. Therefore, the consumers have raised
their concerns and have deemed bottled water to be safer in terms of health conditions.
Dividend discount method

The discount method is method which is used to value a firm’s stock prices. The method applies the
concept of its stock to be equal to its future dividends payments, when discounted to the present. The
future dividends are discounted to get the present values, which are used to value the stock prices. For
the concept to effectively work, the Gordon growth model applies....