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Coca-Cola (KO) Gains 0.7% Ahead of Earnings: What To Expect

Shares of The Coca-Cola Company KO gained about 0.7% during regular hours Tuesday, the last day of trading before it releases its latest quarterly earnings report. Investors were quiet ahead of the report, but this is certainly still a stock to watch once the full results are in.

Coca-Cola reported positive results in its last earnings report, helping stop what was an extended downward spiral. KO beat on both earnings and revenue, thanks largely to a full brand revamp of its Diet Coke product line as well as double-digit growth in its North America and EMEA (Europe, Middle East, and Africa) segments.

Coca-Cola has underperformed in recent months due to the effects of a weakened operating margin caused by accounting changes, structural headwinds, and other cost pressures. Still, strong brand power and investments in newer revenue platforms are big positives for the storied company. This earnings report will be a key indication as to whether the company is getting back on track or if there is still a lot of work to be done.

According to our latest Zacks Consensus Estimates, analysts expect KO to report earnings of $0.60 per share on $8.54 billion in revenue. These results would mark year-over-year growth of 1.7% in earnings but a loss of 12% in revenue.

Investors should also note that KO's consensus earnings projection has trended downward over the course of the quarter. The firm has seen 6 negative estimates for this quarter in the last two months, with 1 coming in the last month. This downward trend has held across the board, with the next quarter, current fiscal year, and next fiscal year not seeing any positive revisions. This one-sided revision activity has contributed to the stock's Zacks Rank #4 (Sell).

Looking at share price performance, KO has shed 0.7% over the past year. However, the stock has performed slightly more poorly as of late, losing 2% on a year-to-date basis. More recently, shares have gained about 6% over the trailing 12 weeks, the beginnings of a trend reversal.

A strong earnings beat might be what KO needs in order to continue reclaiming lost ground. To gauge how likely the company is to outperform estimates tomorrow morning, we can turn to our exclusive Earnings ESP figure.

Zacks Earnings ESP (Expected Surprise Prediction) compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

KO currently has an Earnings ESP of -1.25%. This, combined with its Zacks Rank, makes it difficult to draw a conclusion about its chances at beating earnings estimates on Wednesday morning.

Make sure to check back here for our full analysis once Coca-Cola reports!

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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