Common Stock Valuation Ratios (Price Multiples)

Difficulty: Beginner

Valuation ratios measure the quantity of an asset or flaw (e.g., earnings) associated with ownership of a specified claim (e.g., a share of ownership of the enterprise).


Current Valuation Ratios

Coca-Cola Co., current price multiples

 
Coca-Cola Co. PepsiCo Inc. Beverages Consumer Goods
Selected Financial Data
Current share price (P) $ 44.51
No. shares of common stock outstanding 4,265,906,533
Growth rate (g) -15.63%
 
Earnings per share (EPS) $ 0.29
Next year expected EPS $ 0.25
Operating profit per share $ 1.76
Sales per share $ 8.30
Book value per share (BVPS) $ 4.00
Ratios (Price Multiples)
Price to earnings (P/E) 152.14 31.30 56.02 22.34
Price to next year expected earnings 180.34 27.58 54.55 20.05
Price to operating profit (P/OP) 25.31 14.45 18.98 14.23
Price to sales (P/S) 5.36 2.39 3.45 1.88
Price to book value (P/BV) 11.12 13.95 12.22 6.13

If company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.

Otherwise, if company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.

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Historical Valuation Ratios (Summary)

Coca-Cola Co., historical price multiples

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Price to earnings (P/E) 150.54 27.48 26.01 25.87 19.54
Price to operating profit (P/OP) 25.05 20.80 21.91 18.91 16.40
Price to sales (P/S) 5.31 4.28 4.32 3.99 3.58
Price to book value (P/BV) 11.00 7.78 7.48 6.06 5.06
Ratio Description The company
P/E ratio The P/E ratio tells analyst how much an investor in common stock pays per dollar of current earnings. Coca-Cola Co.'s P/E ratio increased from 2015 to 2016 and from 2016 to 2017.
P/OP ratio Because P/E ratio is calculated using net income, the ratio can be sensitive to nonrecurring earnings and capital structure, analysts may use price to operating profit. Coca-Cola Co.'s P/OP ratio declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.
P/S ratio An rationale for the P/S ratio is that sales, as the top line in an income statement, are generally less subject to distortion or manipulation than other fundamentals such as EPS or book value. Sales are also more stable than earnings and never negative. Coca-Cola Co.'s P/S ratio declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.
P/BV ratio The P/BV ratio is interpreted as an indicator of market judgment about the relationship between a company's required rate of return and its actual rate of return. Coca-Cola Co.'s P/BV ratio increased from 2015 to 2016 and from 2016 to 2017.

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Price to Earnings (P/E)

Coca-Cola Co., historical P/E calculation, comparison to benchmarks

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
No. shares of common stock outstanding1 4,265,906,533 4,293,461,702 4,329,497,778 4,366,243,616 4,405,893,150
Selected Financial Data (USD $)
Net income attributable to shareowners of The Coca-Cola Company (in millions) 1,248  6,527  7,351  7,098  8,584 
Earnings per share (EPS)3 0.29 1.52 1.70 1.63 1.95
Share price1, 2 44.04 41.78 44.16 42.05 38.07
Ratio
P/E ratio4 150.54 27.48 26.01 25.87 19.54
Benchmarks
P/E Ratio, Competitors
PepsiCo Inc. 32.81 24.09 25.72 22.86 17.66
P/E Ratio, Sector
Beverages 56.89 25.81 25.89 24.43 18.71
P/E Ratio, Industry
Consumer Goods 23.15 18.61 18.85 21.72 17.16

1 Data adjusted for splits and stock dividends.

2 Close price on the filing date of Coca-Cola Co.'s Annual Report.

2017 Calculations

3 EPS = Net income attributable to shareowners of The Coca-Cola Company ÷ No. shares of common stock outstanding
= 1,248,000,000 ÷ 4,265,906,533 = 0.29

4 P/E ratio = Share price ÷ EPS
= 44.04 ÷ 0.29 = 150.54

Ratio Description The company
P/E ratio The P/E ratio tells analyst how much an investor in common stock pays per dollar of current earnings. Coca-Cola Co.'s P/E ratio increased from 2015 to 2016 and from 2016 to 2017.

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Price to Operating Profit (P/OP)

Coca-Cola Co., historical P/OP calculation, comparison to benchmarks

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
No. shares of common stock outstanding1 4,265,906,533 4,293,461,702 4,329,497,778 4,366,243,616 4,405,893,150
Selected Financial Data (USD $)
Operating income (in millions) 7,501  8,626  8,728  9,708  10,228 
Operating profit per share3 1.76 2.01 2.02 2.22 2.32
Share price1, 2 44.04 41.78 44.16 42.05 38.07
Ratio
P/OP ratio4 25.05 20.80 21.91 18.91 16.40
Benchmarks
P/OP Ratio, Competitors
PepsiCo Inc. 15.15 15.57 16.77 15.51 12.25
P/OP Ratio, Sector
Beverages 19.27 18.02 19.39 17.22 14.38
P/OP Ratio, Industry
Consumer Goods 14.74 15.45 14.84 15.61 12.93

1 Data adjusted for splits and stock dividends.

2 Close price on the filing date of Coca-Cola Co.'s Annual Report.

2017 Calculations

3 Operating profit per share = Operating income ÷ No. shares of common stock outstanding
= 7,501,000,000 ÷ 4,265,906,533 = 1.76

4 P/OP ratio = Share price ÷ Operating profit per share
= 44.04 ÷ 1.76 = 25.05

Ratio Description The company
P/OP ratio Because P/E ratio is calculated using net income, the ratio can be sensitive to nonrecurring earnings and capital structure, analysts may use price to operating profit. Coca-Cola Co.'s P/OP ratio declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.

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Price to Sales (P/S)

Coca-Cola Co., historical P/S calculation, comparison to benchmarks

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
No. shares of common stock outstanding1 4,265,906,533 4,293,461,702 4,329,497,778 4,366,243,616 4,405,893,150
Selected Financial Data (USD $)
Net operating revenues (in millions) 35,410  41,863  44,294  45,998  46,854 
Sales per share3 8.30 9.75 10.23 10.53 10.63
Share price1, 2 44.04 41.78 44.16 42.05 38.07
Ratio
P/S ratio4 5.31 4.28 4.32 3.99 3.58
Benchmarks
P/S Ratio, Competitors
PepsiCo Inc. 2.51 2.43 2.22 2.23 1.79
P/S Ratio, Sector
Beverages 3.51 3.17 3.09 2.95 2.53
P/S Ratio, Industry
Consumer Goods 1.95 1.92 1.76 1.71 1.55

1 Data adjusted for splits and stock dividends.

2 Close price on the filing date of Coca-Cola Co.'s Annual Report.

2017 Calculations

3 Sales per share = Net operating revenues ÷ No. shares of common stock outstanding
= 35,410,000,000 ÷ 4,265,906,533 = 8.30

4 P/S ratio = Share price ÷ Sales per share
= 44.04 ÷ 8.30 = 5.31

Ratio Description The company
P/S ratio An rationale for the P/S ratio is that sales, as the top line in an income statement, are generally less subject to distortion or manipulation than other fundamentals such as EPS or book value. Sales are also more stable than earnings and never negative. Coca-Cola Co.'s P/S ratio declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.

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Price to Book Value (P/BV)

Coca-Cola Co., historical P/BV calculation, comparison to benchmarks

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
No. shares of common stock outstanding1 4,265,906,533 4,293,461,702 4,329,497,778 4,366,243,616 4,405,893,150
Selected Financial Data (USD $)
Equity attributable to shareowners of The Coca-Cola Company (in millions) 17,072  23,062  25,554  30,320  33,173 
Book value per share (BVPS)3 4.00 5.37 5.90 6.94 7.53
Share price1, 2 44.04 41.78 44.16 42.05 38.07
Ratio
P/BV ratio4 11.00 7.78 7.48 6.06 5.06
Benchmarks
P/BV Ratio, Competitors
PepsiCo Inc. 14.62 13.73 11.75 8.52 4.90
P/BV Ratio, Sector
Beverages 12.41 9.71 8.84 6.96 4.99
P/BV Ratio, Industry
Consumer Goods 6.35 6.29 5.85 5.53 4.31

1 Data adjusted for splits and stock dividends.

2 Close price on the filing date of Coca-Cola Co.'s Annual Report.

2017 Calculations

3 BVPS = Equity attributable to shareowners of The Coca-Cola Company ÷ No. shares of common stock outstanding
= 17,072,000,000 ÷ 4,265,906,533 = 4.00

4 P/BV ratio = Share price ÷ BVPS
= 44.04 ÷ 4.00 = 11.00

Ratio Description The company
P/BV ratio The P/BV ratio is interpreted as an indicator of market judgment about the relationship between a company's required rate of return and its actual rate of return. Coca-Cola Co.'s P/BV ratio increased from 2015 to 2016 and from 2016 to 2017.

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