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evaluation of ko correct?

Questions › Category: Investor Psychology › evaluation of ko correct?
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david yeo asked 2 years ago

Hi,
can cross check the intrinsic value if i applied the correct evaluation PE on KO to get the intrinsic value?
Attached image is my calculation of the intrinsic value.
thanks in advance
david

2 Answers
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Victor Chng answered 2 years ago

Hi David,
 
It is hard for to look through the figures in PDF. Can you send the excel to victor@fifthperson.com

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Victor Chng answered 2 years ago

Hi David,
 
I had look through your excel and realised that there is definitely something wrong with your plotting. 
 
The problem lies in your EPS numbers that you had collected. Did you collect the EPS numbers by yourself because the figure is not adjusted due to one-off items. KO have one-off items that have to be adjusted in certain years. 

david yeo replied 2 years ago

aye, i collected from KO annual reports. in 2017 income statement, there is an 1 time off item (Income taxes from continuing operations). so do i need to remove the entire year of 2017 in my calculations? if i did, this is what i get:
Avg PE eps Intrinsic Value Current Price Margin of safety
21.9 1.79 $39.21 $54.46 -38.88%

Victor Chng replied 2 years ago

Hi David,

Can you send me your excel for your financial numbers to take a look

Victor Chng replied 2 years ago

Hi David,

Based on your new adjusted valuation, I found out some issues:

1.Every year, KO have an equity income item that you need to remove from your net profit. Those are all one-off item.

2.You did not adjust for splits in the number of shares. KO did split before so you have to adjust all those years that have not split because the price data that you collect have accounted for split so your EPS have to account for split too.