Coca‑Cola HBC (LSE: CCH) appears to me like a prime FTSE 100 growth share broadly overlooked by investors. Given this, its price appears to be substantially lagging its true worth (or ‘fair value’).
It is underpinned by strong fundamentals, as one of the largest Coca‑Cola bottlers globally. This enables it to blend solid defensive consumer‑staples resilience with exposure to faster‑growing emerging markets.
So, where should the stock be priced?
Growth ahead?
Ultimately, any firm’s share price is driven by growth in earnings (‘profits’). A risk to these for Coca‑Cola HBC remains the ageing global population, which consumes fewer sugary drinks than younger people. And as a bottling business for Coca-Cola, it remains heavily reliant on this partnership, limiting its ability to diversify its revenue streams.
However, despite these risks, analysts’ consensus forecasts are that the firm’s earnings will grow by an average 9.6% a year to end-2028.
These forecasts look well supported by the company’s 2025 results, released on 10 February. Organic earnings before interest and taxes rose 11.5% year on year to €1.356bn (£1.17bn), underlining the strength of Coca‑Cola HBC’s operating model and the benefits of its premiumisation strategy.
Furthermore, reported revenue increased 7.9% to €11.605bn, reflecting targeted revenue‑growth‑management initiatives continuing to lift pricing power. Organic volume also grew 2.8% to 2.997bn unit cases, driven by strong performances in Sparkling and a remarkable 28.3% surge in Energy. This illustrated the success of the group’s category‑expansion strategy.
Positive for the future as well is that comparable EBIT margins expanded by 40 basis points organically to 11.7%, highlighting improved top‑line leverage and the early benefits of digital and AI‑enabled execution tools.
Together, these metrics show a business delivering consistent operational momentum. A premium mix, disciplined pricing and strong emerging‑market demand all provide a clear runway for further earnings growth ahead.
What’s the fair value of the shares?
Price and value are very different things in assets. Price is simply whatever the market will pay at any moment, but value reflects the fundamentals of the underlying business.
The difference between the two is a key to optimising long-term investors’ profits over time. This is because asset prices (including shares) tend to converge to their ‘fair value’ over the long run.
Discounted cash flow analysis is the method to ascertain a stock’s fair value. This projects any firm’s future cash flows and then discounts them back to today.
Some analysts’ DCF modelling is more conservative than mine, others less so — depending on the variables used. However, based on my DCF assumptions — including a 6.6% discount rate — Coca‑Cola HBC shares are 27% undervalued at their current £45.39 price. And it implies a fair value for the shares of around £62.18.
So that gap suggests a potentially terrific buying opportunity to consider today if those DCF assumptions prove accurate.
My investment view
Coca‑Cola HBC strikes me as the kind of high‑quality FTSE 100 business that too many investors overlook until the rerating is already underway.
It blends strong cash generation and exposure to faster‑growing emerging markets, producing a rare balance of resilience and expansion potential.
The only reason it is not for me is that I focus on high-dividend-yielding shares, aged over 50 as I am. But for younger long‑term investors, I think it is exactly the sort of steady compounder that merits attention.
