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

Zacks Equity Research

Coca-Cola (KO) closed at $51.92 in the latest trading session, marking a +0.72% move from the prior day. This change outpaced the S&P 500's 0.17% loss on the day. At the same time, the Dow added 0.03%, and the tech-heavy Nasdaq lost 0.32%.

Prior to today's trading, shares of the world's largest beverage maker had gained 3.41% over the past month. This has outpaced the Consumer Staples sector's gain of 2.25% and the S&P 500's gain of 3.07% in that time.

Wall Street will be looking for positivity from KO as it approaches its next earnings report date. This is expected to be July 23, 2019. 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 $9.57 billion, up 7.18% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.09 per share and revenue of $34.97 billion. These totals would mark changes of +0.48% and +9.77%, respectively, from last year.

It is also important to note the 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.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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.

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 0.14% lower within the past month. KO is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, KO is currently trading at a Forward P/E ratio of 24.62. Its industry sports an average Forward P/E of 24.38, so we one might conclude that KO is trading at a premium comparatively.

Also, we should mention that KO has a PEG ratio of 3.53. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. KO's industry had an average PEG ratio of 2.23 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 222, putting it in the bottom 14% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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