Coca-Cola Q2 Earnings Preview: Sales Could Be Returning To Pre-Pandemic Levels


  • Experiences Wednesday, July 21, earlier than the market opens
  • Income Expectation: $9.3 billion
  • EPS: $0.56

When Coca-Cola (NYSE:) reviews its newest quarterly earnings tomorrow forward of the open, expectations are that its gross sales may have already recovered to the pre-pandemic stage with the financial reopenings on the planet’s most vaccinated nations.

Coca-Cola Weekly Chart.

Analysts’ consensus estimates name for $0.56-a-share revenue for the interval that ended June 30, up from $0.42 a share . Gross sales are forecast to surge to $9.3 billion, up 29% from the identical interval a 12 months in the past when the world was battling the primary wave of COVID-19 infections, forcing theatres and eating places to stay closed.

In April, Coke reaffirmed its forecast of natural gross sales share progress within the excessive single digits in 2021 and comparable earnings-per-share growth within the excessive single digits to low double digits. These estimates, nevertheless, might nonetheless show optimistic for the buyer large amid the surging instances of the coronavirus in some elements of the world, together with extremely vaccinated international locations just like the U.Okay.

This resurgence in infections has prompted many buyers to dial down their expectations of financial progress within the coming months. Coke, for its half, has already warned buyers, terming restoration in gross sales as “asynchronous.” Unit case quantity, for instance, was down 6% in North America throughout the first quarter, however up 9% in Asia Pacific. Globally, case unit quantity was flat.

Inflation Dangers

One other danger that packaged shopper corporations face is the bounce in costs of supplies they use. For Coke, it’s the upper prices of plastic and aluminum. Chief Monetary Officer John Murphy advised Bloomberg in April that the corporate is “well-hedged” to face up to a lot of the price stress within the close to time period, however subsequent 12 months could possibly be a problem.

Regardless of these challenges, some analysts consider Coca-Cola is able to beat estimates this 12 months, because the consensus underestimates the restoration from the pandemic.

KO Consensus Estimates

Chart courtesy

Amongst 26 analysts polled by, the majority of respondents gave the inventory an ‘outperform’ ranking. As effectively, in a current word, Morgan Stanley reiterated its chubby ranking on the inventory and raised the value goal to $64 per share from $60.

“Quick time period, we see a well-above consensus post-COVID topline/EPS restoration forward; long run, a return to pre-COVID outsized gross sales progress vs. friends, improved execution underneath a reorganization, and better margins with productiveness and decrease advertising and marketing spending.”

With the intention to mitigate the impression of a hunch in gross sales, Coke mentioned in December that it could reduce 2,200 jobs. It has additionally narrowed its deal with core manufacturers, dropping smaller ones like Tab, a food regimen soda in style within the Seventies, and Zico coconut water.

KO shares, after recovering from their pandemic plunge, are flat this 12 months. They closed Monday at $55.73.

Backside Line

Coke stays a strong dividend inventory for long-term buyers, with a yield of three% and a quarterly payout of $0.42. The corporate has now elevated its dividend 58 years in a row.

We consider Coke is an efficient defensive play, particularly when the dangers to progress shares have elevated within the face of a resurgent pandemic that’s sending buyers to hunt shelter in safe-haven shopper shares.

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