Coca-Cola Co Stock Buy Recommendation Reiterated (KO)

NEW YORK ( TheStreet) -- Coca-Cola (NYSE: KO) has been reiterated by TheStreet Ratings as a buy with a ratings score of A-. The company's strengths can be seen in multiple areas, such as its notable return on equity, reasonable valuation levels, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Beverages industry and the overall market, COCA-COLA CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for COCA-COLA CO is rather high; currently it is at 65.10%. 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 15.86% trails the industry average.
  • COCA-COLA CO's earnings per share declined by 12.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, COCA-COLA CO increased its bottom line by earning $1.96 versus $1.85 in the prior year. This year, the market expects an improvement in earnings ($2.15 versus $1.96).
  • KO, with its decline in revenue, slightly underperformed the industry average of 1.5%. Since the same quarter one year prior, revenues slightly dropped by 0.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

The Coca-Cola Company, a beverage company, engages in the manufacture, marketing, and sale of nonalcoholic beverages worldwide. The company primarily offers sparkling beverages and still beverages. Coca-Cola has a market cap of $179.3 billion and is part of the consumer goods sector and food & beverage industry. The company has a P/E ratio of 21.00, above the S&P 500 P/E ratio of 18.00. Shares are up 10.6% year to date as of the close of trading on Friday.

You can view the full Coca-Cola Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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