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

The Coca-Cola Amatil Ltd (ASX:CCL) share price has fallen sharply today. Should you buy the dip?

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

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.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »