It has been about a month since the last earnings report for Coca-Cola (KO Quick QuoteKO - Free Report) . Shares have added about 1.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Coke due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Coca-Cola Q4 Earnings Surpass Estimates, Sales Miss

The Coca-Cola Company has delivered fourth-quarter 2020 results, wherein earnings beat the Zacks Consensus Estimate and rose year over year.  However, the top line lagged estimates and declined on a year-over-year basis. The company witnessed sequential improvements in volume trends.

Comparable earnings of 47 cents per share beat the Zacks Consensus Estimate of 41 cents and improved 6% from the year-ago period. Currency translations negatively impacted earnings by 9%. Comparable currency-neutral earnings per share rose 14%.

Revenues of $8,611 million missed the Zacks Consensus Estimate of $8,699.3 million and declined 5% year over year. Organic revenues were down 3% from the prior-year quarter. The company’s top line reflected improved trends compared with prior quarters. Also, two additional days in the quarter aided revenue growth.

During the quarter, concentrate sales remained even but price/mix was down 3%. Moreover, currency headwinds hurt the company’s top line by 2%.

The company’s global value share in total non-alcoholic ready-to-drink beverages was even. Coca-Cola benefited from underlying share gains in both at-home and away-from-home channels, offset by negative channel mix due to pressures in the away-from-home channel. Notably, the company has a majority share position in the away-from-home channel.

Volume and Pricing

Price/mix was down 3%, driven by adverse channel and package mix in key markets due to the coronavirus outbreak. Also, negative mix in the Global Ventures, Asia Pacific, and Europe, Middle East & Africa segments impacted price/mix. Concentrate sales were 3 points ahead of unit case volume, owing to two additional days in the quarter and cycling of Brexit-related inventory reduction in the prior year.

Coca-Cola’s total unit case volume declined 3% in the fourth quarter on declines in all operating segments, owing to pressures in the away-from-home channels due to the coronavirus outbreak. This was partly offset by continued strength in at-home channels. Though the company witnessed strength in the emerging markets, developed markets remained under pressure.

Category Cluster Performance: Sparkling soft drinks’ unit case volume edged down 1% (compared with a 1% decline in the prior quarter), driven by declines in the fountain business in North America and away-from-home channels in Western Europe, partly offset by growth in China, Brazil and Nigeria. The Coca-Cola trademark was up 1%, with Coca-Cola Zero Sugar improving 3%. Volume for juice, dairy and plant-based beverages declined 2% (compared with a 6% fall in the last reported quarter). The category was primarily impacted by a decline in Minute Maid in the fountain business, offset by strong Simply and fairlife performance in North America. Also, softness in the Asia Pacific and Europe, Middle East & Africa operating segments impacted the category.

Water, enhanced water and sports drinks fell 9% (compared with an 11% decline in the third quarter), mainly owing to broad-based declines across operating segments, particularly for the lower-margin water brands. Tea and coffee volume dropped 15% (compared with a 15% decline in the third quarter), owing to the pandemic-led disruptions at the Costa retail stores as well as headwinds in the dogadan tea business in Turkey.

Segmental Details

Revenues declined 4% for North America, 15% for Latin America, 11% for the Asia Pacific, 14% for Europe, Middle East & Africa (“EMEA”), 16% for Bottling Investments, and 22% for Global Ventures segments.

Organic revenues fell 1% in Latin America, 5% in North America, 12% in the Asia Pacific, 13% in EMEA, 23% in Global Ventures segments and 10% in Bottling Investments.

Margins

Comparable currency-neutral operating income improved 14% year over year, driven by effective cost-management initiatives across all operations, partly offset by top-line pressures and currency headwinds. Comparable operating margin expanded 250 basis points (bps) to 27.3%. In dollar terms, comparable operating income rose 4.3% to $2,353 million.

Guidance

Though the uncertainties related to the coronavirus pandemic remain, the company provided its guidance for 2021. Coca-Cola estimates organic net sales growth in high-single digits in 2021. Comparable net revenues are anticipated to be aided by a 2-3% currency tailwind, based on current rates and hedge positions. The company expects an underlying effective tax rate of 19.5% for 2021.

Based on the above assumptions, it expects comparable EPS growth rate of high-single digits to low-double digits, whereas it reported $1.95 in 2020. Comparable EPS guidance includes a favorable currency impact of 3-4%. Additionally, the company estimates free cash flow of at least $8.5 billion in 2021, with cash flow of at least $10 billion and capital expenditure of $1.5 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Coke has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Coke has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.