Should You Buy This Beverage Giant on the Dip?

This beverage giant is one of the most popular nonalcoholic beverage companies worldwide. The company’s product portfolio spans sparkling soft drinks; water, enhanced water, and sports drinks; juice, dairy, and plant-based beverages; tea and coffee; and…

energy drinks. Coca-Cola (KO – Get Rating) stock has dropped 5.4% over the past month and 2.6% over the past five days to close the last trading session at $52.64. The recent dip can be attributed to the investors shifting toward cyclical sectors with a solid recovery and increasing risk appetites.

However, analysts are optimistic about the stock’s near-term prospects. Out of the 14 Wall Street analysts that rated KO, eight rated it Buy while six rated it hold. The median price target of $62.07 indicates a potential upside of 17.9% from its last closing price.

Here’s what could shape KO’s performance in the near term:

Stable Financials

KO’s net operating revenues increased 42% year-over-year to $10.13 billion in the fiscal second quarter ended July 2. The revenue growth can be attributed to the ongoing recovery in markets where coronavirus-related uncertainty is abating. Its gross profit grew 53% from the year-ago value to $6.34 billion, while its operating income improved 52% year-over-year to $3.02 billion. Net income attributable to the company’s shareholders came in at $2.64 billion, reflecting an increase of 48% year-over-year. The company’s EPS increased 48% year-over-year to $0.61.

Solid Growth Prospects

Analysts expect KO’s revenues and EPS to rise 13.1% and 5.5%, respectively, year-over-year to $9.78 billion and $0.58 in the current quarter (ending September 2021). Also, the company’s revenue is expected to rise 15% and 5.7% in fiscal 2021 and fiscal 2022, respectively.

The consensus EPS estimate of $2.26 for the fiscal year 2021 indicates a 15.9% improvement year-over-year. The street expects its EPS to rise 7.5% year-over-year to $2.43 in 2022. Moreover…

 

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