How to Buy Coca-Cola KO Stock

is coca cola a good stock to buy

Buffett purchased these shares for just under $1.3 billion back in 1988. With $1.64 per share in annual dividends, it also earns $656 million in annual payouts, more than 50% Berkshire’s initial cost basis. The beverage giant is a decades-long top holding of famed investor Warren Buffett’s Berkshire Hathaway, which maintains an ownership stake over 9% today. It now has more than 500 brands, with a portfolio that includes water and hydration products, coffee and teas, juices, dairy, plant-based beverages, and energy drinks. Having several different avenues of growth is just one of the reasons why buying shares now could be a good move for your portfolio.

Valuation metrics show that CocaCola Company (The) may be overvalued. Its Value Score of D indicates it would be a bad pick for value investors. The financial health and growth prospects of KO, demonstrate its potential to underperform the market. Recent price changes and earnings estimate revisions indicate this would be a good stock for momentum investors with a Momentum Score of B. At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors.

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Still, arguably nothing could do more damage to confidence in Coca-Cola stock than ending the streak in payout hikes. Moreover, such an event would probably cause Coca-Cola stock to fall, as Dividend Aristocrat funds and other income-oriented investors would likely sell. Coke is valued at less than 6 times annual sales, which is near its lowest price by that metric since the start of the pandemic. Walmart’s stock price rally hasn’t pushed it into « expensive » territory, either.

Shares are valued at 6.5 times annual sales, which is a large premium compared to PepsiCo’s ratio of 3 times sales. Standout brands included the SmartWater franchise, which grew volumes by 8%. And Coke enjoyed strong sales growth in its European market along with 10% higher volumes in the China geography. The U.S. market was relatively weak, on the other hand, with flat volumes and an 11% increase in average prices.

In 2022, the company paid out $7.6 billion in dividends, comfortably less than its $9.5 billion in free cash flow. This year’s free cash flow is projected to be about the same, so investors have nothing to worry about on this score. Even the strongest business will fail to generate solid investment returns if it is priced too high. This risk is modest for investors considering Coca-Cola stock and even lower for Walmart.

And, of course, the 4 week change helps put the 1 week change into context. The Daily Price Change displays the day’s percentage price change using the most recently completed close. The X Industry values displayed in this column are the median values for all of the stocks within their respective industry. When evaluating a stock, it can be useful to compare it to its industry as a point of reference. The ever popular one-page Snapshot reports are generated for virtually every single Zacks Ranked stock.

An author, teacher & investing expert with nearly two decades experience as an investment portfolio manager and chief financial officer for a real estate holding company. Coca-Cola trades under the stock symbol KO on the New York Stock Exchange (NYSE). This is a publicly traded company that sells shares of common stock. That means that there are no special restrictions on who can buy this stock, nor do you have special rights or restrictions as a shareholder. Analyst estimates call for earnings-per-share (EPS) of $2.60 in 2023, giving us its current P/E (23). Assuming Coca-Cola grows earnings by six percent annually, it would take until Coca-Cola earns $3.08 in 2026 to crack a P/E of 20.

is coca cola a good stock to buy

The stock has gained 11.9% in the last three years, which can be attributed to its solid income and EPS growth. KO has an impressive long-term performance history, as its net income and EPS grew at CAGR of 30.4% and 30.8%, respectively, over the past three years. The fibonacci arc Coca-Cola Company (KO) is one the most familiar global brands in the beverages industry. With a market presence in more than 200 countries, KO operates more than 500 brands across the world. The problem with Coca-Cola is that it has long been a victim of its success.

It takes the consensus estimate for the current fiscal year (F1) divided by the EPS for the last completed fiscal year (F0) (actual if reported, the consensus if not). The PEG ratio is the P/E ratio divided by its long-term growth rate consensus. This ratio essentially compares the P/E to its growth rate, thus, for many, telling a more complete story than just the P/E ratio alone. You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer.

Review Coca-Cola’s Financial Reports

Investors can get a dividend yield of just under 3% at the current share price, which can either be money in your pocket or reinvested to buy more shares to earn more dividends! Coke’s most recent earnings report contained nearly all the good news that an investor could hope for from a consumer-facing business today. Sure, sales volumes were flat as shoppers scaled back on some spending. But Coke showed off its pricing power by raising prices 10% without sacrificing much in the way of demand.

Coca-Cola Stock Has Underperformed the Market for Years. Does It … – The Motley Fool

Coca-Cola Stock Has Underperformed the Market for Years. Does It ….

Posted: Sun, 27 Aug 2023 07:00:00 GMT [source]

Even if you intend on holding your Coca-Cola shares for years, it’s a good idea to periodically check in and review your investment’s performance. You can also usually designate an order type when buying stock. A market order tells the broker to buy or sell the stock right away at the best available price. By contrast, a limit order only goes through once the stock reaches a specified price you pick. Limit orders can be a good idea if you expect a stock’s price to drop soon.

A simple, equally-weighted average return of all Zacks Rank stocks is calculated to determine the monthly return. The monthly returns are then compounded to arrive at the annual return. Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations.

But with a payout ratio climbing to about 87.5% of free cash flow, the dividend claims the overwhelming majority of company profits. All these factors should mean solid returns for investors holding this blue-chip stock. Coke’s business is sensitive to changes in economic growth rates, of course. But its latest operating update demonstrates it can still generate industry-leading sales and profits even as selling conditions worsen.

It’s packed with all of the company’s key stats and salient decision making information. Including the Zacks Rank, Zacks Industry Rank, Style Scores, the Price, Consensus & Surprise chart, graphical estimate analysis and how a stocks stacks up to its peers. The scores are based on the trading styles of Value, Growth, and Momentum.

The company just gave investors a flood of new data about 2022 growth trends.

In 2019, the company’s organic revenue (which excludes currency impacts, acquisitions, or divestitures) grew by between 3% and 13% in its four global geographic regions. In the second quarter of 2020, disruption due to the COVID-19 pandemic caused revenue to drop by 26%, but management said it expects a rebound for the remainder of the year. Investors have some differing expectations around Coca-Cola (KO 0.24%) and Walmart (WMT 0.02%) stocks these days. While the world’s largest retailer is among the best performers on the Dow Jones Industrial Average in 2023, Coke is sitting near the bottom of that list.

EBITDA, as the acronym depicts, is earnings before interest, taxes, depreciation and amortization. That means these items are added back into the net income to produce this earnings number. Since there is a fair amount of discretion in what’s included and not included in the ‘ITDA’ portion of this calculation, it is considered a non-GAAP metric. The EV/EBITDA ratio is a valuation multiple and is often used in addition, or as an alternative, to the P/E ratio. And like the P/E ratio, a lower number is typically considered ‘better’ than a higher number.

Learn how to buy The Coca-Cola Company stock in 5 easy steps.

Any S&P 500 portfolio will also hold shares of KO, as it’s included in that index, as will many large-cap funds. Even in places where nobody speaks English, they’ll know that the iconic red can is a “Coke.” But for investors, this is the brand of one of the largest drink companies on the planet. Coca-Cola owns more than 200 different brands, many with dozens of individual products under their own labels.

But Coke is on track to add to last year’s soaring sales volumes even as it improves on its industry-leading profitability. These factors should support market-beating returns for patient investors who hold this consumer staples giant over the long term. With a 3% dividend yield and a six-decade streak of annual payout increases, Coca-Cola is a Dividend King that offers an attractive income stream for investors.

Long-term debt, deferred income taxes, and other long-term liabilities cumulatively amount to $46.69 billion. Brokers act as intermediaries between you and the stock market, facilitating your orders to buy and sell stocks. They vary widely when it comes to account minimums, fees, and account options, so do your research to find the right broker for your goals. If you’re looking for a simple and easy way to invest, check out our picks for the best online brokers. Coca-Cola left the bottling business and became a seller of drink concentrates, which cost much less money to produce.

These factors helped the company win market share in both at-home and on-the-go sales channels this quarter, which management said is « a clear indicator of the power of our new approach. » However, with bottling being a low-margin business, the refranchising of it led to a rise in margins and thus earnings went up from $0.29 per share in 2017 to $2.09 in 2019. EPS fell to $1.80 in 2020 due to the pandemic impact but is still higher than the years before 2019. But, it’s made even more meaningful when looking at the longer-term 4 week percent change.

The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities. But decision making should also involve an analysis
of price movements and returns. Its quick ratio, which measures the dollar amount of liquid assets available against the dollar amount of current liabilities of a company, stands at .97. The Coca-Cola Company (KO) is the oldest and most prominent beverage company in the world. Founded in 1886, Coca-Cola has stayed at the top of its industry through multinational brand recognition and savvy control of its finances, including its capital structure.

Buy The Coca-Cola Company stock from these online trading platforms

So it’s a good idea to compare a stock’s debt to equity ratio to its industry to see how it stacks up to its peers first. The Cash/Price ratio is calculated as cash and marketable securities per share divided by the stock price. The detailed multi-page Analyst report does an even deeper dive on the company’s vital statistics. It also includes an industry comparison table to see how your stock compares to its expanded industry, and the S&P 500. A steady dividend schedule is a reflection of the financial strength of a stock.

It’s an integral part of the Zacks Rank and a critical part in effective stock evaluation. If a stock’s EPS consensus estimate is $1.10 now vs. $1.00 the week before, that will be reflected as a 10% change. If, on the other hand, it went from $1.00 to 90 cents, that would be a -10% change in the consensus estimate revision. For one, part of trading is being able to get in and out of a stock easily. If the volume is too light, in absolute terms or for a relatively large position, it could be difficult to execute a trade.

Dividends ultimately track cash flow over the long term, and Walmart stands out as a winner on this point as well. While Coke consistently generates over $10 billion in annual operating cash flow, the retailing titan has succeeded in pushing its comparable metric much higher this year. It helps that Walmart is finding areas to significantly boost efficiency, including by reducing inventory holdings in recent quarters. Dividend yields move in opposite directions to stock prices, though, meaning Coke is becoming a more compelling option thanks to its falling valuation and rising yield. But should income investors pick the beverage titan over Walmart right now?

  • You will also find an interesting calculation before going deep into the report.
  • You already know KO has paid 95 dividend payouts since Nov 29, 1999.
  • At the time of this writing, the stock has dropped by almost 25% from its 52-week high.

The news headlines might read like the economy is about to hit rough seas, but the storm’s been ongoing for quite some time if you own growth stocks. The technology-centric NASDAQ is almost 30% off its high, and many small and medium-sized growth stocks are down 50%, 60%, and even 90% from their former highs. Concerns about the banking system and a potential recession have given the market shades of 2008.

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