Coca-Cola Consolidated: A Closer Look at Its ROE and Earnings Growth

Coca-Cola Consolidated (NASDAQ:COKE) has seen its stock decline by 9.8% over the past month, but a deeper analysis of its financials reveals a different story. The company’s return on equity (ROE) is a key measure that assesses how efficiently its management is utilizing capital. A high ROE indicates that the company is generating profits effectively.

ROE is calculated by dividing the net profit from continuing operations by shareholders’ equity. For Coca-Cola Consolidated, the ROE is 35%, which means that for every $1 of shareholders’ capital, the company made a profit of $0.35. This is a strong figure, especially when compared to the industry average of 17%.

Earnings growth is closely tied to ROE. A higher ROE, coupled with effective profit retention, often leads to higher growth rates for a company. Coca-Cola Consolidated’s exceptional 54% net income growth over the past five years can be attributed to its high ROE and effective reinvestment of profits.

In terms of earnings growth, Coca-Cola Consolidated has outperformed the industry average. Its growth rate of 5.4% is significantly higher than the industry’s average growth rate of 5.4% in the same period.

Coca-Cola Consolidated’s low payout ratio of 4.0% indicates that it is retaining 96% of its profits. This suggests that the company is reinvesting heavily to expand its business and has a commitment to sharing profits with shareholders. The company has also been paying dividends for at least ten years, further demonstrating its dedication to sharing profits.

Overall, Coca-Cola Consolidated has shown strong performance. Its high ROE, earnings growth, and efficient reinvestment of profits have helped the company achieve substantial growth. However, it’s important to consider the risks and opportunities associated with the company.

Source: Simply Wall St.