Is The Coca-Cola Company (KO) Being Underestimated by Analysts?

Analysts at HSBC Securities cut their rating on shares of The Coca-Cola Company (NYSE:KO) from Buy to Hold in their opinion released on March 12. Citigroup analysts have downgraded their rating of KO stock from Buy to Neutral in a separate flash note to investors on February 15.

By watching the trading activity of corporate insiders, it will become easier to get a sense of The Coca-Cola Company (NYSE:KO)’s prospects.

The Coca-Cola Company (KO) is expected to jump by 9.63 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $56-month high price target. This represents a whopping 21.16 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $50, which represents a return potential of 8.18 percent when compared to the closing price of the stock of $46.22 on Wednesday, March 13. The lowest price target for the stock is $44 — slightly more than -4.8 percent from KO’s current share price.

The shares are currently floating around the first support level of $45.97. Below this, the next support is placed in the zone of $45.73. Till the time, the KO stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 50.26 on daily chart, which may remain a cause for concern. If the price breaks below $45.73 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $46.4 mark may result into a pull-back move towards $46.59 level.

KO shares accumulated 0.17 points or 0.37 percent on Wednesday to $46.22 with a light trade volume of 16.159 million shares. After opening the session at $46.13, the shares went as high as $46.34 and as low as $45.91, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $200 billion and now has 4.32 billion shares outstanding. The Coca-Cola Company (KO) stock has lost -6.83 percent of market value in 21 trading days.

KO stock has a trailing 3-year beta of 0.52, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was $1.56 a share in the trailing twelve months. The stock’s value has fallen -2.39 percent year to date (YTD) against a rise of 3.8 percent in 12 month’s time. The company’s shares still trade -9.09 percent away from its 1-year high of $50.84 and 11.51 percent up from 52-week low of $41.45. The average consensus rating on the company is 2.4, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Shares of The Coca-Cola Company (KO) are trading at a P/E ratio of 47.59 times earnings reported for the past 12 months. The industry KO operates in has an average P/E of 50.96. Its P/E ratio went as low as 18.42X and as high as 27.74 over the 5-year span. Further, it is sporting a 6.26 on the Price-to-Sales ratio. Compare this with the industry average P/S of 1.42. 63.1 percent is the gross profit margin for The Coca-Cola Company and operating margin sits at 23.7 percent. Along with this, the net profit margin is 20.1 percent.

KO will be showing off its Q1 earnings on April 16. Analysts are forecasting revenue to climb 3.8 percent to $7.92B in the next fiscal quarter, while earnings are seen soaring by nearly -2.13 percent to $0.46 per share. History has shown that shares in The Coca-Cola Company have gone down on 19 different earnings reaction days and are predicted to add 0.02 percent when the company reports upcoming earnings. In last reported earnings results, it earned $0.43 per share, in line with the $0.43, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $7.06B, better than the $7.03B analysts expected. Earnings are estimated to increase by 41.5 percent this year, 8.02 percent next year and continue to increase by 5.27 percent annually for the next 5 years.