Insiders at Coca-Cola Co Have Been Selling Stock

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If insiders are selling company stock, it’s often worth approaching the stock with caution. Insider sales can be a signal that the company is overvalued or that the outlook for the business is deteriorating.

In this report, we are going to highlight some recent insider selling activity at Coca-Cola Co (KO:US). Coca-Cola is a global beverages company that operates in more than 200 countries worldwide. Its brands include Coca-Cola, Sprite, Fanta, Powerade, and Minute Maid. The company is listed on the New York Stock Exchange and currently has a market cap of around $264.92 billion.

Insider Selling

Our data shows that in May, the following insiders at Coca-Cola made large sales:

  • James Quincey, Chairman and CEO 

  • Nancy Quan, Chief Technical and Innovation Officer 

  • Manual Arroyo, Chief Marketing Officer 

  • Henrique Braun, President and International Development 

The largest sale was from Chairman and CEO James Quincey who offloaded 150,000 shares at a price of $64.33 per share, netting close to $10 million.

Combined, the insiders sold around $17 million worth of stock.

Company Experience

There is a lot of company experience among these insiders.

Mr. Quincey first joined the company back in 1996 and since then, he has held a range of top-level positions across the organization. Similarly, Mr. Arroyo joined the company back in 1995 and has held top-level roles globally.

Given the insiders’ experience, we think the large sales here are notable.

High Valuation

As for why the insiders are selling stock, it could be down to the fact that Coca-Cola shares are close to their all-time highs, and the valuation on the stock is lofty.

At present, Wall Street expects the group to generate earnings per share of $2.61 for 2023. That puts the stock on a forward-looking price-to-earnings (P/E) ratio of around 24, which is quite high for a consumer staples company.

It’s worth noting that Coca-Cola’s recent Q1 results were solid. The company beat estimates on both the top and bottom line, delivering earnings per share of 68 cents versus the forecast of 64 cents.

However, the current valuation doesn’t leave a huge margin for error. If earnings were to come in below expectations in the quarters ahead, the stock could experience a significant pullback.

Given the large sales from insiders, we think caution is warranted towards KO stock in the near term.