Coca-Cola: Top-Rated dividend stock breaks out ahead of earnings

Key Points

• Coca-Cola (NYSE: KO) has experienced a significant turnaround in its stock performance, surging nearly 8% over the past three months.
• Technical analysis suggests Coca-Cola's stock is poised for a notable breakout, having surpassed short-term resistance and diverged from its key Simple Moving Averages (SMA).
• Analysts are optimistic about Coca-Cola's future, with a consensus Moderate Buy rating and a robust consensus price target of $66.87.

Shares of Coca-Cola NYSE: KO, the Top-Rated Dividend stock, household brand name, and consumer staple giant, have staged a notable turnaround and comeback lately, with its stock rising close to 8% over the previous three months. 

After plunging to new 52-week lows in October last year, after breaking below previous significant support near $60, the stock traded under $52 briefly before reversing off the lows. Since then, the stock has done nothing but tick higher and reclaimed the all-important $60 area of support. 

From a technical analysis perspective, shares of KO look set for a significant breakout after the stock recently broke above short-term resistance and broke away from its converging 200-day and 50-day Simple Moving Averages (SMA).

With the overall market trading at all-time highs and the consumer staples sector firmly in the green year-to-date, might shares of KO be a buy ahead of further upward momentum throughout the year?

A favorite among value investors

Renowned globally, The Coca-Cola Company is a leading beverage enterprise in over 200 nations. Evolving beyond its iconic sodas, the company now offers an extensive range of nonalcoholic beverages. From sparkling soft drinks to a spectrum including flavored water, sports beverages, and coffee, Coca-Cola's portfolio encompasses various brands such as Fanta, Fresca, Sprite, and more.

Its stock has long been a favorite among investors seeking stability. With moderate volatility, as seen in its 52-week range of $51.55 to $64.99 and a Beta of 0.60, it has also offered investors a sense of reliability. The stocks' impressive dividend yield may best reflect that reliability. KO is a dividend aristocrat with a sixty-two-year dividend increase track record and currently has an above-average dividend yield of 3.02%.

While its mature status implies limited room for rapid expansion, the company remains adept at capitalizing on growth avenues through strategic marketing, innovation in flavor profiles, and operational efficiencies.

Analysts are bullish on KO

Based on eleven analyst ratings, shares of Coca-Cola have a Moderate Buy rating. The stock has an impressive consensus price target of $66.87, forecasting an almost double-digit upside. The low forecast of $60 corresponds with the all-important support level on its chart and a high estimate of $74 calls for an impressive 23% upside. 

Coca-Cola’s consensus rating of Moderate Buy is head and shoulders above the rest. The consensus rating for consumer staples companies is currently Hold, while the S&P 500 consensus rating is also Hold. 

 Most recently, analysts from Barclays and Citigroup took action on the stock. On January 16, analysts from Barclays boosted its target on KO from $60 to $66, calling for over 10% upside at the time of the report date. The following day, analysts from Citigroup boosted its target from $67 to $68, forecasting over 13% at the time of the report date. 

KO report earnings this month

Coca-Cola is scheduled to announce its earnings later this month, on February 13, before the market opens, covering the fiscal quarter ending December 2023. Analysts anticipate an earnings per share (EPS) of $0.48 for the quarter, compared to $0.45 reported in the same quarter last year. Looking ahead, Coca-Cola's earnings are projected to increase from $2.68 per share to $2.81 per share over the next year, indicating a growth rate of 4.85%.

On the valuation front, Coca-Cola currently holds a trailing price-to-earnings ratio of 24.49 and a forward price-to-earnings ratio of 22.75. The price/earnings-to-growth ratio stands at 3.42.