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

Zacks Equity Research
Commercial Metals (CMC) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Coca-Cola (KO) closed at $50.87 in the latest trading session, marking a -0.86% move from the prior day. This change lagged the S&P 500's daily gain of 0.09%. At the same time, the Dow added 0.09%, and the tech-heavy Nasdaq gained 0.62%.

Coming into today, shares of the world's largest beverage maker had gained 3.49% in the past month. In that same time, the Consumer Staples sector gained 1.99%, while the S&P 500 gained 2.08%.

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 $0.62, up 1.64% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $9.58 billion, up 7.26% from the year-ago period.

KO's full-year Zacks Consensus Estimates are calling for earnings of $2.09 per share and revenue of $34.97 billion. These results would represent year-over-year changes of +0.48% and +9.79%, 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. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

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 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 has moved 0.14% lower. 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 24.5 right now. This valuation marks a premium compared to its industry's average Forward P/E of 23.74.

Also, we should mention that KO has a PEG ratio of 3.51. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Beverages - Soft drinks was holding an average PEG ratio of 2.2 at yesterday's closing price.

The Beverages - Soft drinks industry is part of the Consumer Staples sector. This group has a Zacks Industry Rank of 198, putting it in the bottom 23% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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