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Coca-Cola (KO) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

Coca-Cola (KO) closed at $51.33 in the latest trading session, marking a -0.1% move from the prior day. This change lagged the S&P 500's daily loss of 0.04%. At the same time, the Dow lost 0.05%, and the tech-heavy Nasdaq lost 0.01%.

Heading into today, shares of the world's largest beverage maker had gained 6.93% over the past month, outpacing the Consumer Staples sector's gain of 1.49% and the S&P 500's gain of 0.34% in that time.

Wall Street will be looking for positivity from KO as it approaches its next earnings report date. On that day, KO is projected to report earnings of $0.62 per share, which would represent year-over-year growth of 1.64%. Our most recent consensus estimate is calling for quarterly revenue of $9.58 billion, up 7.26% from the year-ago period.

KO's full-year Zacks Consensus Estimates are calling for earnings of $2.09 per share and revenue of $34.97 billion. These results would represent year-over-year changes of +0.48% and +9.79%, respectively.

Investors should also note any recent changes to analyst estimates for KO. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.1% lower. KO is currently a Zacks Rank #3 (Hold).

Digging into valuation, KO currently has a Forward P/E ratio of 24.54. Its industry sports an average Forward P/E of 23.74, so we one might conclude that KO is trading at a premium comparatively.

Also, we should mention that KO has a PEG ratio of 3.46. 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. KO's industry had an average PEG ratio of 2.24 as of yesterday's close.

The Beverages - Soft drinks industry is part of the Consumer Staples sector. This group has a Zacks Industry Rank of 205, putting it in the bottom 20% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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