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Why Coca-Cola Consolidated, Inc. (NASDAQ:COKE) Could Be Worth Watching

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Coca-Cola Consolidated, Inc. (NASDAQ:COKE), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the NASDAQGS. As a US$3.9b market-cap stock, it seems odd Coca-Cola Consolidated is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Let’s examine Coca-Cola Consolidated’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Coca-Cola Consolidated

Is Coca-Cola Consolidated still cheap?

Great news for investors – Coca-Cola Consolidated is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 18.4x is currently well-below the industry average of 33.89x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, Coca-Cola Consolidated’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Coca-Cola Consolidated generate?

earnings-and-revenue-growth
earnings-and-revenue-growth

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted revenue growth of 3.7% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Coca-Cola Consolidated, at least in the short term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since COKE is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on COKE for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy COKE. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed assessment.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. In terms of investment risks, we've identified 2 warning signs with Coca-Cola Consolidated, and understanding them should be part of your investment process.

If you are no longer interested in Coca-Cola Consolidated, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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