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Cola giant The Coca-Cola Company (KO - Analyst Report) is all set to unveil its third quarter 2012 results before the start of trading on October 16, 2012. The Zacks Consensus Estimate for the third quarter is 50 cents (estimated year-over-year decline of 2.5%) on revenues of $12.39 billion (year-over-year increase of 1.1%).

Second Quarter Recap

The Coca-Cola Company delivered adjusted operating earnings of $1.22 per share in the second quarter of 2012, beating the Zacks Consensus Estimate by 2.5%. Earnings also improved 4% from the prior-year quarter. The quarter’s earnings were driven by positive revenue and volume growth, which diluted the impacts from higher commodity costs and currency headwinds.

In the quarter, net revenue increased 3% year over year to $13.09 billion, as benefits from an increase in concentrate sales and positive price/mix were largely pulled down by currency headwinds of 4%. The top-line results were marginally above the Zacks Consensus Estimate of $13.01 billion.

The cola giant witnessed volume growth of 4% in the reported quarter driven mainly by solid growth in the emerging markets of India, Russia, China and Brazil. Among the non-alcoholic ready-to-drink (NARTD) beverages, sparkling beverages grew only 2% in terms of volume. Still beverages rose 9% in terms of volume, registering much better volume growth than the popular soft drinks.

Read our full report at Coca-Cola Beats Overall.

Agreement of Estimate Revisions

Over the past 30 days, only one of 13 estimates for Coca-Cola’s third quarter 2012 earnings has been revised upward. None of the estimates have been reduced for the quarter over that timeframe. Earnings estimates for 2012 have also seen an upward trend with 3 of 15 estimates going up over the last 30 days. However, one estimate has moved down for 2012 over that timeframe.

Most of the estimates were revised after the announcement of second quarter results in July 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 third quarter of 2012 has remained static over the last 7 as well as 30 days at 50 cents. The consensus estimate for 2012 has also remained static at $2.00 over the last 7 as well 30 days.

Surprise History

Coca-Cola has surpassed earnings estimates in three of the past four quarters, while meeting in one. The company recorded a maximum positive surprise of 5.26% in the final quarter of 2011. On average, the earnings surprise is a positive 2.98% over the same timeframe.

Our Recommendation

We currently have a Neutral recommendation on The Coca-Cola Company. The stock carries a Zacks #2 Rank (a short-term ‘Buy’ rating) reflecting the uptrend in estimate revisions.

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. Soft economic conditions and tough currency environment also concern us.

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