Gauging Coca-Cola’s Share Price Movement in 2015
Coca-Cola’s 2Q15 Earnings: What Can Investors Expect?
Stock performance
As of July 16, Coca-Cola’s (KO) share price has increased by 0.4% to $41.48 since the announcement of the company’s results for Q1 2015 on April 22. However, the company’s share price has declined by 1.6% since the beginning of 2015. The Consumer Staples Select Sector SPDR Fund (XLP) has appreciated by 3.6% since the beginning of 2015. Coca-Cola (KO) makes up 9.0% of the XLP ETF. It’s the fund’s second-largest holding.
Peers’ stock movement
The share prices of PepsiCo (PEP) and Dr Pepper Snapple (DPS) have appreciated by 2.6% and 10% since the beginning of 2015. Share prices of Monster Beverage (MNST), in which Coca-Cola has a 16.7% stake, appreciated by 29.1% over the same period.
The year-to-date decline in Coca-Cola’s share price is influenced by continued softness in the demand for carbonated soft drinks (or CSDs), which constitute a major portion of the company’s business. Sparkling beverages represented 73% of Coca-Cola’s worldwide unit case volumes in 2014. Given the shift in consumer preference to healthier beverages, the company needs to aggressively expand in still beverage categories like ready-to-drink tea and bottled water.
Valuation
As of July 16, Coca-Cola was trading at a forward price-earnings (or PE) ratio of 20.3x, down 3.6% since the beginning of 2015. Valuation is down by 1.3% since the announcement of the company’s 1Q15 results. Currency fluctuations have heavily affected the company’s recent results, given its significant international exposure. Peers PepsiCo and Dr Pepper Snapple are currently trading at a forward PE of 20.6x and 19.4x, respectively.
Coca-Cola’s valuation is higher than the broader market, represented by S&P 500 Index, which is currently trading at a forward PE of 17.2x. Coca-Cola makes up ~0.9% of the SPDR S&P 500 ETF (SPY).
For more earnings analysis and updates, visit our Nonalcoholic Beverages page.
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