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

Zacks Equity Research

Coca-Cola (KO) closed the most recent trading day at $55.12, moving -1.17% from the previous trading session. This move lagged the S&P 500's daily gain of 1.3%. Elsewhere, the Dow gained 1.41%, while the tech-heavy Nasdaq added 1.75%.

Prior to today's trading, shares of the world's largest beverage maker had gained 4.87% over the past month. This has outpaced the Consumer Staples sector's gain of 1.77% and the S&P 500's gain of 0.46% in that time.

Investors will be hoping for strength from KO as it approaches its next earnings release. On that day, KO is projected to report earnings of $0.56 per share, which would represent a year-over-year decline of 3.45%. Our most recent consensus estimate is calling for quarterly revenue of $9.52 billion, up 15.46% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.10 per share and revenue of $36.85 billion. These totals would mark changes of +0.96% and +15.68%, respectively, from last year.

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. 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. KO currently has a Zacks Rank of #2 (Buy).

In terms of valuation, KO is currently trading at a Forward P/E ratio of 26.51. This represents a premium compared to its industry's average Forward P/E of 22.39.

It is also worth noting that KO currently has a PEG ratio of 3.88. 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. Beverages - Soft drinks stocks are, on average, holding a PEG ratio of 2.77 based on yesterday's closing prices.

The Beverages - Soft drinks industry is part of the Consumer Staples sector. This group has a Zacks Industry Rank of 159, putting it in the bottom 38% 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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