Rating Change #6
Coca-Cola Bottling Company
has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and weak operating cash flow.
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Highlights from the ratings report include:
- COKE's revenue growth has slightly outpaced the industry average of 0.7%. Since the same quarter one year prior, revenues slightly increased by 3.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- 43.90% is the gross profit margin for COCA-COLA BTLNG CONS which we consider to be strong. Regardless of COKE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, COKE's net profit margin of 0.47% is significantly lower than the industry average.
- Net operating cash flow has significantly decreased to $17.81 million or 50.61% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The debt-to-equity ratio is very high at 3.64 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, COKE has a quick ratio of 0.66, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
Coca-Cola Bottling Co. Consolidated, together with its subsidiaries, engages in the production, marketing, and distribution of nonalcoholic beverages, primarily products of The Coca-Cola Company. The company has a P/E ratio of 20.5, above the S&P 500 P/E ratio of 17.7. Coca-Cola has a market cap of $431.2 million and is part of the consumer goods sector and food & beverage industry. Shares are down 9.2% year to date as of the close of trading on Monday.
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