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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 $54.25, marking a -0.77% move from the previous day. This move lagged the S&P 500's daily loss of 0.28%. Elsewhere, the Dow lost 0.42%, while the tech-heavy Nasdaq lost 0.03%.

Prior to today's trading, shares of the world's largest beverage maker had gained 1.11% over the past month. This has lagged the Consumer Staples sector's gain of 2.4% and the S&P 500's gain of 3.31% 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 $0.43 per share, which would represent no growth from the year-ago period. Our most recent consensus estimate is calling for quarterly revenue of $8.86 billion, up 25.47% from the year-ago period.

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.

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. The Zacks Consensus EPS estimate remained stagnant within the past month. KO is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that KO has a Forward P/E ratio of 24.37 right now. This represents a premium compared to its industry's average Forward P/E of 20.7.

Meanwhile, KO's PEG ratio is currently 3.72. 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 1.98 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 156, putting it in the bottom 39% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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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