Critical Review: Coca-Cola Company (The) (KO) and SodaStream International (NASDAQ:SODA)

SodaStream International (NASDAQ: SODA) and Coca-Cola Company (The) (NYSE:KO) are both consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, analyst recommendations, risk, profitability, earnings, valuation and dividends.

Dividends

Coca-Cola Company (The) pays an annual dividend of $1.48 per share and has a dividend yield of 3.2%. SodaStream International does not pay a dividend. Coca-Cola Company (The) pays out 154.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Coca-Cola Company (The) has raised its dividend for 54 consecutive years.

Valuation and Earnings

This table compares SodaStream International and Coca-Cola Company (The)’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
SodaStream International $501.96 million 2.56 $89.48 million $2.70 21.81
Coca-Cola Company (The) $38.86 billion 5.00 $10.89 billion $0.96 47.49

Coca-Cola Company (The) has higher revenue and earnings than SodaStream International. SodaStream International is trading at a lower price-to-earnings ratio than Coca-Cola Company (The), indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

48.5% of SodaStream International shares are held by institutional investors. Comparatively, 63.7% of Coca-Cola Company (The) shares are held by institutional investors. 1.5% of Coca-Cola Company (The) shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and recommmendations for SodaStream International and Coca-Cola Company (The), as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SodaStream International 0 2 1 0 2.33
Coca-Cola Company (The) 2 12 6 0 2.20

SodaStream International presently has a consensus price target of $57.67, indicating a potential downside of 2.06%. Coca-Cola Company (The) has a consensus price target of $45.26, indicating a potential downside of 0.73%. Given Coca-Cola Company (The)’s higher possible upside, analysts plainly believe Coca-Cola Company (The) is more favorable than SodaStream International.

Volatility and Risk

SodaStream International has a beta of 1.2, indicating that its share price is 20% more volatile than the S&P 500. Comparatively, Coca-Cola Company (The) has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500.

Profitability

This table compares SodaStream International and Coca-Cola Company (The)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SodaStream International 11.89% 14.86% 12.04%
Coca-Cola Company (The) 10.68% 34.53% 8.99%

Summary

Coca-Cola Company (The) beats SodaStream International on 11 of the 17 factors compared between the two stocks.

SodaStream International Company Profile

SodaStream International Ltd. is a sparkling water company. The Company manufactures, distributes and sells home beverage carbonation systems, which enable consumers to transform ordinary tap water into sparkling water and flavored sparkling water. The Company’s segments include The Americas, Western Europe, Asia-Pacific, and Central and Eastern Europe, Middle East and Africa (CEMEA). The Americas segment consists of the United States, Canada and other markets in North America, Central America and South America, which are influenced by the consumption culture of the United States. The Western Europe segment consists of its markets in Western and Northern Europe, which are characterized by high price levels. Its Asia-Pacific segment consists of its markets in Australia and New Zealand, together with other markets in East Asia, including Japan and South Korea. The CEMEA segment consists of its markets in Central and Eastern Europe, Israel and South Africa.

Coca-Cola Company (The) Company Profile

The Coca-Cola Company is a beverage company. The Company owns or licenses and markets non-alcoholic beverage brands, primarily sparkling beverages and a range of still beverages, such as waters, flavored waters and enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, sports drinks, dairy and energy drinks. The Company’s segments include Europe, Middle East and Africa; Latin America; North America; Asia Pacific; Bottling Investments, and Corporate. The Company owns and markets a range of non-alcoholic sparkling beverage brands, including Coca-Cola, Diet Coke, Fanta and Sprite. The Company owns or licenses and markets over 500 non-alcoholic beverage brands. The Company markets, manufactures and sells beverage concentrates, which are referred to as beverage bases, and syrups, including fountain syrups, and finished sparkling and still beverages.

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