Insights

Is Coca-Cola flat in 2024?

By Paul Reid

23 April 2024

coca cola 2024

At a time when market shifts can turn trading portfolios upside down in mere hours, Coca-Cola (KO) stands out as a beacon of stability. Known for generous dividends, Coca-Cola has not only paid dividends but also increased them annually for over six decades. In February, Coca-Cola upped its shareholder payout once again, by more than 5%, underscoring the allure of its dividends.

But do high dividends for shareholders provide traders with actionable forecasting insights?

More than just soda

Coca-Cola, while synonymous with its classic soda, boasts a diverse array of successful beverage brands. From Minute Maid orange juice to Powerade sports drinks and the Costa Coffee chain in Europe, Coca-Cola's extensive brand portfolio competes vigorously on the global stage. 

Despite its maturity, Coca-Cola continues to achieve growth, reporting a 6% revenue increase in the last year alone. The company's operational discipline has kept profitability high, evidenced by a net income of $10.7 billion in 2023, resulting in a robust net margin between 22% and 25%. Coca-Cola's strong free cash flow, nearly $10 billion for the past two years, comfortably covers its increased dividend payments.

Coca-Cola's growth and valuation prospects

Looking forward, growth might appear subdued with only modest increases projected. However, the robust dividend yield of 3.2%, coupled with a forward P/E ratio of nearly 24, suggests that Coca-Cola remains a solid pick for long-term investors. The anticipated per-share net income growth of 4% this year, and nearly 7% in 2025, also provides a favorable outlook for the stock.

What the chart says

Both the 50-day and 200-day simple moving averages are currently above the stock price, possibly indicating a sell signal. Coca-Cola also broke below a rising trend channel this month, suggesting a potential slower growth rate or a downturn on the horizon. There was a breakdown through support at $59.76, which could signal a further decline to $57.95 or lower.

The Stochastic Oscillator RSI has had several accurate signals that preceded market changes throughout 2024. Currently low at 44 on the 0-100 scale at the time of writing, it remains far from the overbought territory of 70+.

Overall, several technical indicators are pointing towards a possible downtrend for Coca-Cola stock in the short term.

Conclusion

Traders may feel apprehensive about trading KO at the moment. Fundamentals analysis suggests a possible long-term rally, while technical indicators yield mostly bearish forecasts. 

For now, Coca-Cola seems underpriced given its advertised growth rates, and the reminder announcement of consistent dividend increases and the company's intrinsic strength may inspire investors once again. 

Deciding which strategy and forecasting approach is ultimately up to each trader. Just keep in mind that both forecasts can be right, but not within the same period. The push and pull of contrasting signals may generate some exciting yet manageable volatility, so make sure your trading account is fully verified before the next market shift.


This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.


Author:

Paul Reid
Paul Reid

Paul Reid is a financial journalist dedicated to uncovering hidden fundamental connections that can give traders an advantage. Focusing primarily on the stock market, Paul's instincts for identifying major company shifts is well established from following the financial markets for over a decade.