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Coca-Cola (KO) Gains As Market Dips: What You Should Know

Zacks Equity Research
·3-min read

Coca-Cola (KO) closed at $50.10 in the latest trading session, marking a +0.4% move from the prior day. The stock outpaced the S&P 500's daily loss of 0.81%. Elsewhere, the Dow lost 0.46%, while the tech-heavy Nasdaq lost 1.69%.

Heading into today, shares of the world's largest beverage maker had gained 1.74% over the past month, outpacing the Consumer Staples sector's gain of 0.5% and lagging the S&P 500's gain of 3.56% in that time.

Wall Street will be looking for positivity from KO as it approaches its next earnings report date. The company is expected to report EPS of $0.50, down 1.96% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $8.52 billion, down 0.92% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.12 per share and revenue of $36.73 billion, which would represent changes of +8.72% and +11.26%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for KO. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 1.56% higher within the past month. KO currently has a Zacks Rank of #3 (Hold).

In terms of valuation, KO is currently trading at a Forward P/E ratio of 23.15. Its industry sports an average Forward P/E of 20.22, so we one might conclude that KO is trading at a premium comparatively.

Investors should also note that KO has a PEG ratio of 4.28 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Beverages - Soft drinks stocks are, on average, holding a PEG ratio of 2.74 based on yesterday's closing prices.

The Beverages - Soft drinks industry is part of the Consumer Staples sector. This industry currently has a Zacks Industry Rank of 163, which puts it in the bottom 37% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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Zacks Investment Research