Coca-Cola Shares Correcting On Long-Term Chart: A Technical Breakdown

The Coca-Cola Co KO has rewarded its shareholders with more than a 100 percent appreciation in price since the 2009 lows, with a healthy dividend yield to boot during that entire time. As a relatively slow growth picture at this point in time, how much further can the shares move up? Or does this "slow growth" story have another higher growth chapter for the bulls?

Let's take a look at both the fundamental and technical side of the Coke story to get a better idea of what's in store for Coke shares.

What The Bulls See

• Some attractive valuation metrics: An enterprise value of $197.71 billion which crushes the company's market capitalization of only $2.9 billion and a price-to-sales ratio of 3.86.
• Net profit margins of 15.43 percent that spin off over $5.81 billion in positive levered free cash flows annually.
• Good management effectiveness metrics: Return on assets of 7.46 percent and a return on equity of 22.26 percent.
• A healthy 3.2 percent dividend yield.
• A decent short-term financial strength metric in the 1.02 current ratio.

What The Bears See

• Some rich valuation metrics: A price-to-book ratio of 5.86 and a PE ratio of nearly 20 versus estimated revenue and EPS growth rates for the next year of 2.8 percent and 7.1 percent, respectively.
• Some sketchy balance sheet metrics: Cash of $21.69 billion versus debt of $41.78 billion and a debt-to-equity ratio of 136.72 percent.

The Technical Take

Technicians note that Coke shares may have a bit further to pull back before major buying interest re-enters the fray. The stock, according the analysts, appears to have two levels of potential support relatively nearby. Both levels are Fibonacci retracement levels (of the up move from the 2009 low) and both represent corresponding horizontal support lines as well.

Overall…

Coca-Cola is truly a beloved social icon of a company. In terms of the stock, love only runs hot if the returns are positive. As any technician will say, much of a return of a long stock (or short stock) investment is a function of the entry point.