There are two stocks whose reputations seem almost impervious to their performance and prospects. One is The Coca-Cola Co (NYSE:KO) and the other is Procter & Gamble Co (NYSE:PG). In the case of both KO stock and PG stock, investors continue to argue that both are safe, steady dividend payers that should be a part of any investor’s portfolio.

Those arguments are half right.

Both P&G and Coca-Cola pay handsome dividends; Coca-Cola stock, at the moment, yields 3.35%. But neither stock is safe — nor should either stock be owned. I’ve already detailed my bearishness on P&G and I continue to believe the KO is one of the ten most overvalued stocks in the S&P 500. In both cases, the world is moving away from the companies’ core brands — which is particularly true in the case of Coca-Cola.

And in both cases, investors simply seem to ignore the lack of performance, particularly at Coca-Cola. Somewhat incredibly, over the last 20 years, KO stock has risen 28% — total. That’s an average of just 1.3% growth per year. Adding in the generally-healthy dividend gets total return to 4% a year or so, but that’s well below a simple US equity index fund, and barely better than Treasury yields at this point.

I’m highly skeptical that’s going to change any time soon. At the least, I can’t imagine Coca-Cola’s fourth-quarter report on Friday will alter the story here. This is a company whose core business likely is in decline. And at 22 times forward earnings per share, KO stock isn’t priced as such.

The Soda Problem

The core problem here looks to be the fact that soda consumption is flat (no pun intended) at best, and likely to decline. Coca-Cola itself is pushing smaller sizes. Though Chicago repealed its “soda tax” last year, levies have been instituted in Seattle and Philadelphia, among other cities. Ireland and the UK, Mexico and France have instituted similar taxes at the national level. The purpose of those taxes is to lessen consumption — and many consumers (myself included) are doing that on their own.

Concerns about chemicals have led to continued significant declines in Diet Coke, the company’s second-largest brand. Coke is trying to recapture share in that space with Coke Zero Sugar, but Diet Coke’s dominance will be missed. Smaller brands like Sprite and Fanta are showing some life in the North American market, and there remain some international opportunities. But this remains primarily a soda company at heart — and that seems a major problem.

Can Coke Jumpstart Growth?

It’s true that cigarette companies, which have faced — and still face — similar pressures, are doing fine. Altria Group Inc (NYSE:MO) is literally the most successful stock ever by one measure. But in the US, Altria has benefited from the 1990s-era settlement, which pretty much ended tobacco advertising, and locked in its Marlboro brand atop the heap. The company’s international spinoff, Philip Morris International Inc. (NYSE:PM), actually has been a rather tepid performer.

Coke doesn’t have that luxury. And, notably, it continues to miss out in every adjacent category to where its core drinkers might head. National Beverage Corp. (NASDAQ:FIZZ) has come from nowhere to build a leadership position in flavored sparkling water. Coke’s Dasani lags.

It was Monster Beverage Corp (NASDAQ:MNST) that won in energy drinks, not Coca-Cola (Coke does own ~18% of Monster, at least). Coke sold its stake in Keurig, where it couldn’t build a viable alternative to SodaStream International Ltd. (NASDAQ:SODA). Keurig now is part of Coca-Cola competitor Dr Pepper Snapple Group Inc. (NYSE:DPS).

Even rival PepsiCo, Inc. (NASDAQ:PEP), which has outperformed Coca-Cola stock handily over the past five years, has the Frito-Lay snack business. What does Coke have? It’s acquired plant-based beverage companies in China and a Mexican sparkling water producer. At its Investor Day, the company talked up Powerade’s success in Mexico and online advertising in Pakistan.

This is a $190 billion company. Those wins are nice, and those deals may make some sense, but even in total they’re not moving the needle.

This simply isn’t a company that’s winning outside of soda — and soda growth is basically zero. Organic revenue is up 2% so far this year (refranchising efforts in the bottling business are significantly impacting reported sales). Unit case volume growth is zero, after 1% growth in 2016 and 2% the year before. Roughly 45% of that volume, per the company’s 10-K, comes from the Coca-Cola brand. Is there any chance of real, sustainable growth in that brand? If not, how else is Coca-Cola supposed to grow — and KO stock finally begin to climb?

KO Stock Isn’t Cheap

Indeed, per its Investor Day, Coke’s own targets are for 7-9% EPS growth (with some help from share repurchases). Yet, Coca-Cola stock trades for 22x 2018 analyst EPS estimates.

That’s not a multiple that suggests moderate growth, even in this market. And it’s not a multiple that is going to expand. Investors aren’t going to pay 25x or 30x earnings for KO stock. The stock likely is only going to increase as much as earnings do — at best.

That growth is projected to be 5% next year, with the help of share buybacks and tax reform. Longer-term, it realistically looks like the low single-digits at best. And if soda consumption really starts to decline, Coca-Cola has little recourse left.

Q4 earnings, whether a beat or a miss, aren’t going to change that problem. Coca-Cola stock simply isn’t what too many investors still believe it is.

This is a stagnant business with a poor track record of late in winning in key markets. That’s not a business that should be valued at 22x earnings.

And it’s highly likely that at some point, it won’t be.

As of this writing, Vince Martin has no positions in any securities mentioned.