Stock Analysis

Here's Why Coca-Cola Consolidated (NASDAQ:COKE) Has Caught The Eye Of Investors

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NasdaqGS:COKE
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It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

In contrast to all that, many investors prefer to focus on companies like Coca-Cola Consolidated (NASDAQ:COKE), which has not only revenues, but also profits. While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

See our latest analysis for Coca-Cola Consolidated

How Fast Is Coca-Cola Consolidated Growing Its Earnings Per Share?

Coca-Cola Consolidated has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. As a result, we'll zoom in on growth over the last year, instead. Coca-Cola Consolidated's EPS skyrocketed from US$23.44 to US$29.98, in just one year; a result that's bound to bring a smile to shareholders. That's a impressive gain of 28%.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. While we note Coca-Cola Consolidated achieved similar EBIT margins to last year, revenue grew by a solid 10% to US$5.9b. That's progress.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

earnings-and-revenue-history
NasdaqGS:COKE Earnings and Revenue History September 12th 2022

While profitability drives the upside, prudent investors always check the balance sheet, too.

Are Coca-Cola Consolidated Insiders Aligned With All Shareholders?

It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. Shareholders will be pleased by the fact that insiders own Coca-Cola Consolidated shares worth a considerable sum. Notably, they have an enviable stake in the company, worth US$1.1b. That equates to 25% of the company, making insiders powerful and aligned with other shareholders. Very encouraging.

Should You Add Coca-Cola Consolidated To Your Watchlist?

You can't deny that Coca-Cola Consolidated has grown its earnings per share at a very impressive rate. That's attractive. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in Coca-Cola Consolidated's continuing strength. Fast growth and confident insiders should be enough to warrant further research, so it would seem that it's a good stock to follow. You should always think about risks though. Case in point, we've spotted 1 warning sign for Coca-Cola Consolidated you should be aware of.

Although Coca-Cola Consolidated certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Valuation is complex, but we're helping make it simple.

Find out whether Coca-Cola Consolidated is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About NasdaqGS:COKE

Coca-Cola Consolidated

Coca-Cola Consolidated, Inc., together with its subsidiaries, manufactures, markets, and distributes nonalcoholic beverages primarily products of The Coca-Cola Company in the United States.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation3
Future Growth0
Past Performance5
Financial Health4
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Solid track record with adequate balance sheet.