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Coca-Cola Amatil Ltd records new low: Is it a buy?

On a day where the benchmark S&P/ASX 200 (INDEXASX:XJO) has remained relatively flat, embattled beverage distributor Coca-Cola Amatil Ltd (ASX: CCL) fell by as much as 0.7% to record a fresh five-year low at just $8.96 per share.

The shares are now sitting 25% down since the beginning of the year and 42% below their all-time high price of $15.43, recorded in March 2013.

As had been expected, the company delivered a disappointing half-year report recently which showed a 15.6% fall in net profit compared to the prior corresponding period. This was largely due to aggressive competition from Schweppes as well as marginal pressures from the supermarket duopoly, namely Woolworths Limited (ASX: WOW) and Coles, owned by Wesfarmers Ltd (ASX: WES).

While there is every chance the company could continue to fall in value in the near term, CCA remains a terrific opportunity for long-term investors to buy shares at a compelling price. Given the strength of the brand and the action being taken by management, I expect shareholders who remain patient will be well rewarded over the coming years.

In addition, the strength of its balance sheet has enabled it to maintain a solid dividend distribution, albeit at slightly lower than last year’s. Currently, the stock is expected to pay a total dividend of roughly 50 cents for the year, putting it on a yield of 5.6%, franked to 75%.

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Motley Fool contributor Ryan Newman owns shares in Coca-Cola Amatil Ltd.

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