Alex Xu of Investary Group, recently submitted a research video on Coca Cola (KO) stock. His main are of focus was the declining trend in soda consumption and how it is impacting Coca Cola's growth trajectory.

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Coca Cola stock has been moving higher consistently for the last couple of months after bottoming out in August and September 2015. Cola Cola stock is now up by about 12%-13% since those lows, rising to about $44 a share, up from about $37 per share in August this year. The stock has seen a strong turnaround in sentiment, so much so that some analysts were speculating if Coca Cola stock has now topped out. while there are others who believe that Coca Cola stock is a great long term investment, Alex Xu has a more conservative view on the stock and thinks that it doesn't constitute a great investment at the moment.

Cola Cola earnings have not been a huge concern, and the company has delivered a healthy beat for the last couple of quarters. This is in fact one of the reasons the uptrend has continued after Cola Cola reported Q3 earnings that beat estimates in October, driving up the Coca Cola stock price. Alex Xu expects Q4 earnings to be strong and beat the upper end of Wall Street expectations. He things Coca Cola's EPS could hit $0.40 per share quite easily. However, it is Coca Cola's revenue that Alex is worried about. Coca Cola's revenue estimates for Q4 are much lower than the corresponding quarter in the last year, and are not even in the same range or territory. Wall Street is expecting less than $10 billion in revenue, which he thinks Coca Cola (NYSE:KO) will exceed easily, though he's unsure by how much.

Alex thinks that this downward trend in Coca Cola revenue is something investors should pay attention to. Changing consumer preferences, he thinks, is something that's worth a deeper look. Specifically, he thinks energy drinks are a big concern for Coca Cola, with many consumers not using them at all. There's a set of consumers that have reduced their consumption of these drinks, as well as sports drinks. Regular CSDs or Carbonated Soda Drinks have remained roughly where they were, but there are fewer consumers that have increased their consumption, when compared to the number of consumers that have reported a decline in consumption.

The major problem for Coca Cola here as Alex sees it, is the reason for a reduced consumption. According to data put together from sources, Alphawise and Morgan Stanley Research, the biggest factor that's triggered the reduced consumption is sugar content in these CSDs. That segment constitutes about 62% of the reason for reduced consumption. This compares with 12%, who found a change in the taste, and just 9% who reduced consumption because of the prices and 4% who attributed the reduction to a change in the product consumed. So that's a big problem for Coca Cola, given that the vast majority of reduced consumption is coming from factors that are inherent to these products.

Alex cites the Trefis model to look at where the profits are coming in for Cola Cola. Coca Cola has $8 billion coming in gross profit. Bulk of that comes from CSDs, which is bulk of Coca Cola's business.

Alex Xu has a hold rating on Coca Cola stock. He thinks that Coca Cola stock is overvalued at 21 times forward earnings, although Coca Cola is cheaper than its peers in the industry, like Monster, PepsiCo., (PEP) etc. Coca cola is facing tax issues, which Alex highlights as one of the things investors have to keep in mind while evaluating Coca Cola stock. He thinks that consumption will remain relatively flat, which could hurt Coca Cola's revenue trajectory in the near term.

To sum up, Alex Xu thinks that Coca Cola isn't all that attractive right now for investors who want to take fresh positions in Coca Cola stock.