Home News What you need to know ahead of Tuesday’s Coca-Cola earnings report

What you need to know ahead of Tuesday’s Coca-Cola earnings report

by SuperiorInvest

Key takeaways

  • Coca-Cola Co. is projected to maintain its momentum with fourth-quarter net income rising 10% and revenue rising 7% to $10.8 billion.
  • Analysts expect a big increase in Coca-Cola’s revenue earned in Latin America and almost 5% growth in North America.
  • Investors will be monitoring the company’s results in unit case volume to see if consumers continue to accept higher prices due to inflation or if weight-loss drugs begin to reduce sales.

Coca-Cola Co. (KO) is expected to maintain the momentum from last quarter, when the beverage giant demonstrated that consumers continue to buy its beverages even as inflation drove up prices.

Analysts project another quarter of growth for the soft drink maker, both on top and bottom lines, when it reports earnings before the market opens on Tuesday.

According to data from Visible Alpha, analysts anticipate that Coca-Cola’s net income in the fourth quarter of 2023 will increase almost 10% to $2.15 billion on revenue of $10.76 billion, an increase of almost 7% with compared to the quarter of the previous year.

Analysts also expect earnings per share (EPS) to rise 4 cents to 49 cents. Free cash flow for the quarter is projected to fall to $1.93 billion from $2.24 billion in the fourth quarter of 2022.

The world’s most valuable drinks company has forecast better results after recent reports showed higher prices were significantly impacting its sales. After stronger-than-expected sales in the previous quarter, Coca-Cola raised its full-year EPS guidance and raised its full-year revenue forecast from 10% to 11% for 2024.

Analyst estimates for the fourth quarter of 2023 Third quarter of 2023 Fourth quarter of 2022
Revenue $10.76 billion $11.9 billion $10.12 billion
Earnings per share 49 cents 74 cents 45 cents
Net income $2.15 billion 3.2 billion dollars 1.94 billion dollars

Key Metric: Unit Case Volume

Measuring the volume of beverages sold by Coca-Cola eliminates how exchange rates and price changes can affect revenue, providing a better view of how many bottles the beverage maker sells. Coca-Cola improved unit case volume last quarter, due in part to higher volume in Latin America and Asia-Pacific, and increased sales of Coke Zero Sugar in North America.

One concern for investors is the impact of Ozempic, a diabetes drug that is also used for weight loss, as it and similar weight-loss treatments are raising concerns that these products could reduce consumers’ appetite for The snacks. Last quarter’s sales showed that so far, weight loss drugs had not yet surpassed the sales of Coca-Cola, Sprites, Fantas and other brands.

Business Focus: Latin American Growth

Coca-Cola is projected to grow revenue across all of its geographic regions, with North America forecast for 4.7% annual growth and Latin America revenue up nearly 13%. While stronger than any other region, growth in Latin America will be much lower than this time last year, when it posted 26% year-over-year revenue growth.

North American revenue growth projections would be the lowest of any quarter this year and would be the company’s lowest fourth-quarter revenue growth since the pandemic year of 2020. The company is also expected to reverse its losses from the previous year in Europe to increase its quarterly turnover. income by approximately 4.5%.

While Coca-Cola is growing its revenue and expanding its global reach, the stock has not responded. Despite raising its full-year guidance last July, its share price did not follow suit, falling 15% in early October, before recouping most of those losses by the end of the year.

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