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Here's What to Expect From Coca-Cola (KO) in Q1 Earnings

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The Coca-Cola Company (KO - Free Report) is likely to register top and bottom-line declines when it reports first-quarter 2021 numbers on Apr 19, before the opening bell. The Zacks Consensus Estimate for the company’s first-quarter earnings stands at 50 cents, suggesting a decline of 2% from the year-ago quarter’s reported figure. Further, the consensus mark has been unchanged in the past 30 days.

For fourth-quarter revenues, the consensus mark is pegged at $8.47 billion, suggesting a 1.6% decline from the prior-year quarter’s reported figure.

In the last reported quarter, the leading soft-drink maker delivered an earnings surprise of 14.6%. Moreover, its bottom line beat the Zacks Consensus Estimate by 14.4%, on average, over the trailing four quarters.

CocaCola Company The Price and EPS Surprise

 

CocaCola Company The Price and EPS Surprise

CocaCola Company The price-eps-surprise | CocaCola Company The Quote

Key Points to Note

Coca-Cola has been witnessing improved trends since the fourth quarter of 2020. Also, it witnessed sequential improvements in volume trends in the last reported quarter. Notably, strength in at-home channels is likely to have offset the pressures in the away-from-home channels in the quarter under review.

Additionally, the company is expected to have gained from the streamlining of portfolio and accelerating investments to expand digital presence due to the shift in consumer preference. Coca-Cola has been witnessing a splurge in e-commerce with the growth rate of the channel doubling in many countries. The company has been accelerating investments to expand presence in this channel compared with the pre-crisis levels. It has been digitizing the enterprise for several years but has accelerated the evolution into an organization that efficiently executes marketing, commercial, sales and distribution, both offline and online.

Also, aggressive cost-saving measures across the organization are expected to have helped cushion operating margin in the first quarter. This is likely to have aided the bottom line.

However, continued pressures in the away-from-home channel, which account for nearly half of its revenues, are expected to have affected revenues. Regional lockdowns due to the resurgence of COVID-19 in certain markets are expected to have impacted market share growth, particularly in the away-from-home channel. Moreover, negative price/mix due to adverse channel and package mix in key markets, owing to the coronavirus outbreak, is expected to have impacted sales.

Also, unfavorable currency has been a headwind. On the last reported quarter’s earnings call, the company expected unfavorable currency to have minimal impact on first-quarter comparable net revenues. Meanwhile, comparable earnings per share are expected to include currency headwinds of 2% in the first quarter.

Zacks Model

Our proven model does not conclusively predict an earnings beat for Coca-Cola this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Coca-Cola has a Zacks Rank #3 and an Earnings ESP of 0.00%.

Stocks Likely to Beat on Earnings

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

The Boston Beer Company, Inc. (SAM - Free Report) presently has an Earnings ESP of +17.87% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kimberly-Clark Corporation (KMB - Free Report) currently has an Earnings ESP of +0.13% and a Zacks Rank #3.

Archer Daniels Midland Company (ADM - Free Report) has an Earnings ESP of +4.55% and a Zacks Rank #3 at present.

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