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

Zacks Equity Research

In the latest trading session, Coca-Cola (KO) closed at $48.62, marking a -0.78% move from the previous day. This change lagged the S&P 500's 0.53% loss on the day. Elsewhere, the Dow lost 1.04%, while the tech-heavy Nasdaq added 0.67%.

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 $0.43, down 31.75% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $7.61 billion, down 23.93% from the prior-year quarter.

KO's full-year Zacks Consensus Estimates are calling for earnings of $1.83 per share and revenue of $33.91 billion. These results would represent year-over-year changes of -13.27% and -7.33%, respectively.

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

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.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. KO is holding a Zacks Rank of #4 (Sell) right now.

In terms of valuation, KO is currently trading at a Forward P/E ratio of 26.81. This represents a premium compared to its industry's average Forward P/E of 24.42.

It is also worth noting that KO currently has a PEG ratio of 5.57. 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. The Beverages - Soft drinks was holding an average PEG ratio of 5.08 at yesterday's closing price.

The Beverages - Soft drinks industry is part of the Consumer Staples sector. This industry currently has a Zacks Industry Rank of 68, which puts it in the top 27% 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.

To follow KO in the coming trading sessions, be sure to utilize Zacks.com.


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