According to Beverage Digest, total sales volumes fell 3%to 8.9 billion cases in 2013, the lowest since 1995. Soda sales have declined every year since 2005.
Health concerns are a large reason for the decline in sales. "The beverage industry is getting more and more challenging in the U.S. The obesity and health and wellness headwinds are not letting up," Beverage Digest Editor John Sicher said. Sicher added that diet soda sales were impacted bu worries about the healthfulness of artificial sweeteners in the beverages.
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TheStreet Ratings team rates COCA-COLA CO as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate COCA-COLA CO (KO) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its expanding profit margins, good cash flow from operations, reasonable valuation levels and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for COCA-COLA CO is rather high; currently it is at 65.74%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 15.48% trails the industry average.
- Net operating cash flow has remained constant at $2,830.00 million with no significant change when compared to the same quarter last year. In addition, COCA-COLA CO has modestly surpassed the industry average cash flow growth rate of -5.22%.
- COCA-COLA CO's earnings per share declined by 7.3% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, COCA-COLA CO reported lower earnings of $1.90 versus $1.96 in the prior year. This year, the market expects an improvement in earnings ($2.10 versus $1.90).
- KO, with its decline in revenue, slightly underperformed the industry average of 3.9%. Since the same quarter one year prior, revenues slightly dropped by 3.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: KO Ratings Report
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.