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Coca-Cola (KO) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Coca-Cola (KO) closed the most recent trading day at $54.97, moving +1.2% from the previous trading session. This change outpaced the S&P 500's 0.49% gain on the day. At the same time, the Dow added 0.28%, and the tech-heavy Nasdaq gained 0.43%.

Heading into today, shares of the world's largest beverage maker had gained 2.57% over the past month, lagging the Consumer Staples sector's gain of 3.1% and the S&P 500's gain of 2.9% in that time.

KO will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.43, unchanged from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $8.86 billion, up 25.47% from the prior-year quarter.

KO's full-year Zacks Consensus Estimates are calling for earnings of $2.10 per share and revenue of $36.78 billion. These results would represent year-over-year changes of +0.96% and +15.46%, respectively.

Any recent changes to analyst estimates for KO should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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. Over the past month, the Zacks Consensus EPS estimate has moved 0.01% higher. KO currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, KO is holding a Forward P/E ratio of 25.85. Its industry sports an average Forward P/E of 23.07, so we one might conclude that KO is trading at a premium comparatively.

Meanwhile, KO's PEG ratio is currently 3.95. 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 industry currently had an average PEG ratio of 2.18 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 156, which puts it in the bottom 39% 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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