I think Coke is worth $300B

Here's my DCF valuation of Coca-Cola:

You can find a link to the model here.

Here are my assumptions:

• Owner's earnings: $11.4B

• Expected growth rate: 6%

• Historic P/FCF: 25

• Discount rate: 5%

Owners' earnings were calculated by taking the reported free cash flow of 5.3 billion and taking out the 6.1 billion fair life contingent consideration paid that was made in Q1.

The expected growth rate of 6% comes from Coke's long-term growth algorithm (e.g. using their own words!). They expect to have 4-6% organic revenue growth each year and 7-9% comparable currency-neutral EPS growth.

I use 5% as a discount rate, but then add a 30% margin of safety at the end. 5% is low. I usually base it on the 10-year Treasury, as this is what Buffett has said he does.

Am I buying?

Coca-Cola's market cap is $350 billion, so at this time I will not be buying because I believe it's fully valued.

This wasn't a waste of time though. I know so much more about the amazing company that is Coca-Cola, and why Buffett calls it "inevitable".

And, now that I've done the hard part, if the stock price ever drops below $300 billion, I'll be looking to back the truck up.