I first bought shares in Coca-Cola Amatil Ltd (ASX: CCL) in May 2014, almost two-and-a-half years ago. Some long-term readers may recognise this article, where I subsequently valued the company and considered buying more shares.

The premise behind my investment was simple. I thought Coca-Cola was undervalued and I expected that new management, the cost cutting program, and initial success in Indonesia would be the catalyst for an upward re-rating in the company’s price.

That might yet happen, but two-and-a-half years is a long time to wait for business performance and when the potential upside on the table is around 20% (by my calculations, more on this below), I’m not convinced that keeping my money in Amatil is the best decision for me.

Here’s what happened:

I recently updated my Discounted Cash Flow (DCF) model (see above link) with Coca-Cola’s latest results. Over the past two years the company performed worse than I forecast in its core Australian beverage business, while Alcohol, NZ + Fiji, and Indonesia either met or exceeded expectations.

Ongoing capital expenditure was about half of what I forecast, and was reduced further by the deferral of the $500 million Indonesian investment from The Coca-Cola Company. This money is now just sitting in the bank, reducing Amatil’s interest expense – and incidentally, lower interest payments were the key contributor to the company’s recent increase in profit.

Indonesia was the standout performer in the recent half and continued growth at that rate would definitely get investors excited. However, even updating my model for much higher Indonesian growth and lower capital expenditure, my DCF suggests that Coca-Cola shares are still worth around $11 each. This was initially what I thought they were worth two years ago.

If I adjusted the figures further to reflect current low interest rates (i.e., a lower ‘risk-free’ rate) my valuation increases to $12. Either way, shares appear to be around 20% undervalued. With falling earnings in the crucial Australian beverages segment offsetting Indonesian growth for the time being, I’m not keen on sticking around for another few years waiting to capture a potential 20% increase in value.

Had I invested in XERO FPO NZX (ASX: XRO) or Retail Food Group Limited (ASX: RFG) at the same time as Amatil, I’d be down 38% or up 65% respectively – but both businesses have made significantly greater progress in this time than Amatil has.

But..but..?

Approximately half of the predictions I made in my initial model were inaccurate, and that will probably prove the case again here. After all, my estimates of future results are just that – estimates. However, after two-and-a-half years I feel that Amatil has had enough time to get its feet underneath it and I’d prefer to give another company its chance to shine.

(For the record, I sold my shares at $9.90 apiece last Wednesday)

That said, I still like the business and it has a number of attractive attributes including reliable cash-flows and a market-leading position in each of its key markets. If shares dropped towards $8 again like we saw several times last year – increasing the potential upside – I would strongly consider buying back in. I also believe that the Indonesian market will continue growing for many years yet and will in time prove the value in Amatil shares at today’s prices.

My initial investment thesis didn’t pan out however, and in the meantime I will be looking for other opportunities.

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Motley Fool contributor Sean O'Neill does not own shares of Coca-Cola Amatil Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.