Is Coca-Cola an Outperform?

With shares of The Coca-Cola Company (NYSE:KO) trading at around $37.56, is KO an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

The stock didn’t respond well to the Q4 earnings report yesterday, but should that be looked at as an opportunity? Let’s take a look at the basics first. Q4 EPS came in at $0.41. This was stronger than Q4 2011 EPS of $0.36. Profits rose as more drinks were sold overseas. Q4 revenue came in at $11.46 billion, which was a 4 percent increase year-over-year. FY2012 EPS was $1.97, which was an improvement over $1.85 in FY2011.

North America and Europe soda volume declined due to fewer soda drinkers. Soda sales volume in North America dropped 2 percent. This will be covered further in the Trends section. Overall sales volume also declined in Europe. However, Coca-Cola expects a rebound in Europe. The good news is that North America sales volume (not just soda) increased 1 percent. This was mostly due to Powerade and bottled tea.  

Another factor that has the potential to impact sales in the future is that PepsiCo (NYSE:PEP) has stepped up its game. For instance, Pepsi is now sponsoring the Super Bowl halftime show, and there is no telling what else the company has up its sleeve. Coca-Cola has still increased its market share, and Coca-Cola has stated that it likes the competition because it keeps the company on its toes. We’ll see how it plays out.

Let’s take a look at some important numbers prior to forming an opinion on this stock…