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Why the Coca-Cola Amatil Ltd share price has been CRUSHED today

Unfortunately for its shareholders, the Coca-Cola Amatil Ltd (ASX: CCL) share price is not having a great end to the week.

In morning trade the beverage company’s shares have fallen almost 10% to $9.69 following a disappointing Easter trading update.

According to the release, year-to-date trading in its Australian Beverages segment has been weaker than last year, with all of its channels experiencing volume and price pressure as a result of competition and category trends.

In light of this, management expects underlying net profit after tax to decline in the first-half of FY 2017.

While management does expect things to improve in the second-half, at this point in time they predict full-year underlying net profit after tax to be in line with last year’s result.

Should you buy the dip?

As recently as the end of last month, I felt Coca-Cola Amatil’s shares were expensive and at risk of a pull-back.

Whilst one has now come, I’m still not ready to invest. With earnings likely to be flat at best this year, 18x underlying earnings is still a little rich for my liking.

While management is working on initiatives with The Coca-Cola Company to address the structural changes in the market and rebalance its portfolio, until things improve I would focus on other consumer staples shares instead.

Shares such as a2 Milk Company Ltd (Australia) (ASX: A2M) and Tassal Group Limited (ASX: TGR) could be better options in my opinion.

Alternatively these fantastic shares could be even better investments today. If I owned Coca-Cola Amatil shares I would sell them to buy these.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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