Share a Coke with Warren Buffett

Paul Price submits:

This company needs no introduction. Approximately 74% of sales and 77% of profits came from outside North America in 2007. Coke (KO) is one of the most consistent and predictable consumer stocks available today. Including the just concluded 2008, EPS grew in 17 of the past 19 years with the last negative year-over-year period coming in 1999 when earnings were off from $1.42 to $1.30. Since then each of the nine years has shown growth with EPS expected to have come in at $3.12 for the year ended Dec. 31^st.

Consensus estimates revolve around $3.27 - $3.29 for 2009. That puts KO shares at just 14.3x last year's and < 13.7x forward earnings. This is the lowest valuation of these shares since just after the crash of 1987. In fact, the 10-year median P/E was (in my view) an excessive 26x and the 5-year average annual P/E from 2003 – 2007 was 20.9x.

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