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Cola giant, The Coca-Cola Company (KO - Analyst Report) is all set to unveil its second quarter 2012 results on July 17, 2012, before the start of trading. The Zacks Consensus Estimate for the second quarter is $1.19 (estimated year-over-year improvement of 1.7%) on revenues of $13.0 billion (year-over-year increase of 2.1%).

First Quarter Recap

The Coca-Cola Company delivered adjusted operating earnings of 89 cents per share in the first quarter of 2012, beating the Zacks Consensus Estimate by a penny. Earnings were also above the prior-year adjusted earnings of 86 cents per share driven by strong revenue and volume growth which made up for margin declines.

In the quarter, net revenues increased 6% year over year to $11.1 billion, benefiting from an increase in concentrate (syrups, powders etc used in finished beverages) sales and positive price mix (3%). The results were above the Zacks Consensus Estimate of $10.8 billion. The cola giant witnessed volume growth (unit case volume) of 5% in the reported quarter with gains in all geographic regions as well as across all non-alcoholic ready-to-drink (NARTD) beverages, whether sparkling (NARTD with carbonation) or still (NARTD without carbonation).

Read our full report at Coca-Cola Beats on Volume

Agreement of Estimate Revisions

Over the past 7 days, 2 of the 12 estimates on Coca-Cola has been revised for the second quarter of 2012. The revisions have been in the downward direction. Over the last 30 days 3 of the 12 estimates have gone down for the second quarter of 2012. Earnings estimates for 2012 have however seen a balanced revision with 1 estimate each going up and down over the last 7 as well as 30 days. There were 15 estimates available for the full year.

Most of the estimates were revised after the announcement of the first quarter results in April this year. The company has not announced any major news since then which explains the stalemate in estimate revisions.

Magnitude of Estimate Revisions

Given the limited estimate revisions, the consensus estimate for the second quarter of fiscal 2012 has remained static over the last 7 as well as 30 days at $1.19. The consensus estimate for fiscal 2012 has also remained static at $4.07 over the last 7 as well 30 days.

Surprise History

Coca-Cola has surpassed earnings estimates in all the past four quarters, recording a maximum positive surprise of 2.60% in the final quarter of 2011. On average, the earnings surprise was a positive 1.65%.

Our Recommendation

We currently have a Neutral recommendation on The Coca-Cola Company. The stock carries a Zacks #3 Rank (a short-term ‘Hold’ rating).

We are encouraged by the company’s global reach, strong brand power, expanding presence outside the U.S. and its solid cash position. Moreover, the company’s acquisition of Coca-Cola Enterprises’ (CCE - Analyst Report) Bottling business and its productivity initiatives are expected to result in significant cost savings. However, Coca-Cola needs to ramp up its advertising spending to match arch competitor PepsiCo Inc.’s (PEP - Analyst Report) increased focus on North American beverages. Moreover, rising costs of inputs have also hurt the company’s margins.

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