The Coca-Cola Company (Ticker Symbol: KO) reported revenue late last week that beat analysts’ expectations. The soda giant reported earnings of .56 cents per share, which was right in line with what Wall Street analysts were expecting. Revenue released by Coca-Cola was slightly better than expected, reporting revenues of $9.5 billion vs. Wall Street analysts’ expectations of $9.4 billion. The company cited strength in its lower sugar products and demand from its smaller can sizes. Coca-Cola’s Coke Zero brand saw double-digit volume growth and saw a 15% increase out of the sales of its 7.5 oz can.
The company’s bottled water growth has been hindered in recent months due to consumers rethinking their plastic use. Coke is working on ways to become more environmentally friendly and is planning to sell its Dasani water in aluminum cans and bottles. The company is also trying to expand its reach into the energy drink markets with its new Coca-Cola Plus Coffee drink and with Coke Energy. Coca-Cola Plus Coffee is available in over 20 markets and Coke Energy is currently available in 25 countries and will soon be released in the United States on January 2020.
The above image is a shorter-term chart of Coca-Cola’s stock over the past two years. Coke started off with a negative tone to the year in 2018, trading down over 10%. The stock found itself slowly grinding lower in the first two quarters of 2018, finding some price support just below the $42.00 price level. 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 black lines. 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, rally briefly, and then found some dynamic price support at its 200-day moving average, and continued to rally over 20% before finding some price resistance around the $50.00 level. Coca-Cola started off the year in 2019 on a positive note drifting higher. Unfortunately for investors, Coke took a brief turn after a poor earnings and revenue report sent the stock gapping lower over 6% in the first quarter of 2019. The stock found some life in the second quarter of 2019, just below the $45.00 dollar level and began to ease higher. Coke found some dynamic price support at its 100 and 200-day Moving Averages in the second quarter of this year. The company then proceeded to rally over 25%, to trade to an all-time high of $55.92 on September 3rd, 2019. Currently, the stock is trading just above its 100-day moving average.
(Chart above courtesy of www.tipranks.com)
Based on a survey of 14 analysts offering 12-month price targets, the average price target for Coca-Cola’s stock is $57.92. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $53.86.
Investors should look to Coca-Cola’s next earnings release on February 16th for fresh news within the company.