Coca-Cola Stock Slips 11% in 3 Months: Buy the Dip or Wait for Now?

Core Viewpoint - Coca-Cola's stock has declined by 11.3% over the past three months, underperforming the Consumer Staples sector and the S&P 500, while slightly outperforming the broader industry [1][2]. Stock Performance - Coca-Cola's stock trades at $61.71, which is a 16.1% discount from its 52-week high of $73.53 and a 6.5% premium from its 52-week low [5]. - The stock is currently below its 50 and 200-day moving averages, indicating bearish sentiment [5][6]. - Compared to competitors, Coca-Cola has outperformed PepsiCo and Keurig Dr Pepper, which saw declines of 16.1% and 14.4%, respectively, but underperformed against Monster Beverage's gain of 0.6% [2]. Challenges - The decline in Coca-Cola's stock is attributed to soft volume trends, with a 1% year-over-year revenue drop reported in Q3 2024 [7][8]. - Unit case volume decreased by 1% and concentrate sales volume fell by 2%, with challenges noted in key markets like China, Mexico, and Türkiye [8]. - Macroeconomic factors such as low consumer confidence in China, geopolitical issues, and high inflation in Argentina are impacting revenues [9]. Currency and Revenue Impact - Currency headwinds are expected to affect 2024 revenues by 5%, with additional impacts from acquisitions and divestitures projected to reduce revenues by 4-5% [10]. - Comparable EPS growth is anticipated to face headwinds of 9% from currency fluctuations and 1-2% from structural changes [10]. Valuation - Coca-Cola maintains a high valuation with a forward P/E multiple of 20.84X, which is below its five-year median of 23.59X but above the broader industry multiple of 18.98X [11][12]. - The current valuation is considered unwarranted given the recent performance and challenges faced by the company [13]. Long-Term Growth Prospects - Despite recent declines, Coca-Cola's strong market presence and commitment to innovation position it for potential recovery [15]. - The company is expanding its product portfolio to include healthier options and is targeting the ready-to-drink alcoholic beverages market [16][17]. - Coca-Cola projects organic revenue growth at the higher end of its 2024 guidance, expecting a 10% year-over-year increase and a 14-15% rise in currency-neutral EPS [18]. Estimate Revisions - The Zacks Consensus Estimate for Coca-Cola's revenues and EPS for 2024 indicates year-over-year growth of 1% and 6%, respectively, with 2025 estimates showing growth of 3.98% and 3.8% [19].