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

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Coca-Cola (KO - Free Report) closed at $59.43 in the latest trading session, marking a +0.61% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.22%. Meanwhile, the Dow lost 0.13%, and the Nasdaq, a tech-heavy index, added 0.22%.

Prior to today's trading, shares of the world's largest beverage maker had lost 2.54% over the past month. This has was narrower than the Consumer Staples sector's loss of 9.21% and the S&P 500's loss of 10.02% in that time.

Coca-Cola will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.68, unchanged from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $10.83 billion, up 6.92% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.47 per share and revenue of $42.1 billion. These totals would mark changes of +6.47% and +8.9%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for Coca-Cola. 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.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.05% higher. Coca-Cola is currently sporting a Zacks Rank of #2 (Buy).

In terms of valuation, Coca-Cola is currently trading at a Forward P/E ratio of 24.1. Its industry sports an average Forward P/E of 20.31, so we one might conclude that Coca-Cola is trading at a premium comparatively.

It is also worth noting that KO currently has a PEG ratio of 3.45. 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. Beverages - Soft drinks stocks are, on average, holding a PEG ratio of 2.74 based on yesterday's closing prices.

The Beverages - Soft drinks industry is part of the Consumer Staples sector. This industry currently has a Zacks Industry Rank of 104, which puts it in the top 42% 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.

To follow KO in the coming trading sessions, be sure to utilize Zacks.com.


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