The FTSE 100’s Coca-Cola HBC (LSE: CCH) has dipped since its 31 July 12-month traded high of £28.52.

I think this is mainly due to profit-taking after a 36% rise from its 12-month traded low of £20.65.

Nonetheless, it appears a rare chance to consider buying the shares for investors who think it fits their overall portfolio aims.

What are its growth prospects?

Ultimately, rising earnings will power increases in a firm’s share price and dividend over time.

In theory, the business looks full of promise to me, as a strategic bottling partner of The Coca-Cola Company. This in turn is a core holding of legendary investor Warren Buffet’s Berkshire Hathaway. So far, so good, as far as I am concerned.

In practical terms as well, its H1 2024 results were strong. Organic net sales revenue jumped 13.6% year on year to €5.176bn (£4.33bn). Organic sales are a company’s revenue from its core operations, while reported sales include both organic and non-organic sales. Operating profit climbed 1.6% to €566m.

The company flagged potentially challenging macroeconomic and geopolitical backdrops in H2. The variety of consumer profiles in the 29 countries in which it operates also remains a risk in my view.

That said, it raised its key 2024 targets. Organic revenue growth is expected to be 8%-12% higher (compared to the previous 6%-7%). And organic earnings before interest and taxes growth is forecast to rise 7%-12% (from a 3%-9% forecast).

Consensus analysts’ estimates are that its earnings will grow by 12% each year to the end of 2026.

Are the shares undervalued?

I never buy stocks that look overpriced compared to their competitors or to their future cashflow projections.

On the key price-to-earnings (P/E) ratio of relative stock valuation, Coca-Cola HBC currently trades at 18.9. This is cheap compared to its peer group P/E average of 22.4.

The same can be said for its price-to-book ratio of just 4.1 against a competitor average of 9.6.

And it also looks a bargain on the price-to-sales ratio measure, presently trading at 1.2 versus a 2.3 average for its peers.

To translate all this into hard cash terms, I ran a discounted cash flow analysis using other analysts’ figures and my own.

It shows Coca-Cola HBC shares to be 43% undervalued at their current price of £28.10. So a fair value for the shares would be £49.30.

They may go lower or higher than that, given the vagaries of the market. But this underlines to me how cheap the stock looks right now.

Will I buy it?

I have focused on stocks that pay very high dividends since I turned 50 a few years ago.

Coca-Cola HBC last year paid a dividend of 93 euro cents (78p) that gives a current yield of just 2.8%. Analysts forecast that this return will rise to 3.4% in 2025 and to 3.7% in 2026.

Nonetheless, these still fall well short of the average 9% or so that I receive from my core high-yield stocks.

If I were even 10 years younger, I would buy the stock, as its earnings growth potential looks excellent to me. This should prompt a rise in the very undervalued share price and in the dividend too, I think.