Coca-Cola Hits All-Time High After Earnings Report

The Coca-Cola Company (Ticker Symbol: KO) reported earnings before the bell on Tuesday that beat analysts’ expectations on the top and bottom line.  The soda giant reported and earnings per share beat of .63 cents per share vs. Wall Street analysts’ expectations of .61 cents per share.  Revenue released by Coca-Cola was also better than expected, reporting revenues of $10.0 billion vs. Wall Street analysts’ expectations of $9.99 billion.  The company had strong performance from its flagship Coke Classic brand this quarter along with double-digit growth in its Coke Zero brand.  The company did raise its full-year outlook for revenue by 5%.

Coca-Cola teamed up with Netflix for its popular show “Stranger Things” to promote its “New Coke” that was first released in 1985, which debuted during the timeframe in which the show takes place. The release of “New Coke” was a bust,  angered many of Coca-Cola’s loyal fan base, and was discontinued shortly after.  Coca-Cola is now re-releasing its “New Coke” with the timing of “Stranger Things” season 3, to tailor to the show’s eighties theme.

Coca-Cola’s stock started off to a weak start in 2018, trading down over 10%. The stock found itself trading in a three dollar trading range between the $42.00 and $45.00 price levels for most of the first two quarters of 2018. In that same quarter, Coca-Cola bottomed, forming a bullish divergence pattern, where the stock makes a lower low in price but the Relative Strength Index makes a higher low, as indicated on the chart by the red squares. Traders and investors sometimes look at divergences for a possible pause within the current trend which can, at times, lead to a reversal, as occurred in Coca-Cola’s case. Coca-Cola’s stock proceeded to break above its 2018 downtrend and continued to rally over 20% before finding some price resistance around the $50.00 level.

Coca-Cola started off into 2019 on a positive note moving consistently higher.  However, the stock took an unfortunate turn for the worse, after a weak earnings and guidance report that sent the stock gapping lower over 7% in the first quarter of 2019.  Coca-Cola found some life just below the $45.00 dollar level and the stock found support at its 100 and 200-day Moving Averages in the second quarter of this year, went on to rally over 18% and is currently trading at an all-time high as of this writing.

(Chart above courtesy of ​​)

Based on a survey of 8 analysts offering 12-month price targets, the average price target for Coca-Cola’s stock is $53.17.  According to that number, the stock is priced at a premium relative to Wall Street’s analysts and could be considered overvalued around current levels near $54.23.

Coca-Cola released its first energy drink, Coca-Cola Energy, this quarter that uses caffeine from natural sources and is currently available in 14 countries.  The company has not shared when it plans on bringing the drink to the U.S.  To Coca-Cola shareholders’ delight, legendary investor Warren Buffet is still a major holder of the stock and it is still a top-three holding of Buffet’s Berkshire Hathaway.  Investors should look to Coca-Cola’s next earnings release on July 30th for fresh news on the company.