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Coca-Cola (KO) Gains But Lags Market: What You Should Know

Zacks Equity Research
·3 min read

Coca-Cola (KO) closed at $53.28 in the latest trading session, marking a +0.41% move from the prior day. This change lagged the S&P 500's 0.58% gain on the day. Meanwhile, the Dow gained 0.49%, and the Nasdaq, a tech-heavy index, added 0.84%.

Prior to today's trading, shares of the world's largest beverage maker had gained 0.86% over the past month. This has lagged the Consumer Staples sector's gain of 1.51% and the S&P 500's gain of 2.12% 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 $0.41 per share, which would represent a year-over-year decline of 6.82%. Our most recent consensus estimate is calling for quarterly revenue of $8.69 billion, down 4.21% from the year-ago period.

KO's full-year Zacks Consensus Estimates are calling for earnings of $1.88 per share and revenue of $33.06 billion. These results would represent year-over-year changes of -10.9% and -9.66%, respectively.

Investors should also note any recent changes to analyst estimates for KO. These revisions help to show the ever-changing nature of near-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. 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 currently has a Zacks Rank of #3 (Hold).

Investors should also note KO's current valuation metrics, including its Forward P/E ratio of 28.17. Its industry sports an average Forward P/E of 24.03, so we one might conclude that KO is trading at a premium comparatively.

Meanwhile, KO's PEG ratio is currently 6.71. 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 4.13 as of yesterday's close.

The Beverages - Soft drinks industry is part of the Consumer Staples sector. This industry currently has a Zacks Industry Rank of 211, which puts it in the bottom 18% 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.

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


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Zacks Investment Research