We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The Coca-Cola Company (KO - Free Report) has reported better-than-expected top and bottom-line results in third-quarter 2021. Moreover, both earnings and sales improved year over year. Results benefited from the company’s strategic transformation and ongoing recovery around the world. Volume growth was driven by continued strength in the at-home channel and improvement in the away-from-home business. Driven by the momentum in its business, the company lifted its 2021 view.
Comparable earnings of 65 cents per share beat the Zacks Consensus Estimate of 58 cents and improved 18% from the year-ago period. Favorable currency translations aided earnings by 3%. Comparable currency-neutral earnings per share rose 14%.
Revenues of $10,042 million surpassed the Zacks Consensus Estimate of $9,591 million and improved 16% year over year. Organic revenues rose 14% from the prior-year quarter. The company’s top line benefited from improved price/mix and an increase in concentrate sales. Revenues gained from the ongoing recovery in markets, where the pandemic-led disruptions are subsiding.
CocaCola Company The Price, Consensus and EPS Surprise
In the reported quarter, the company gained a global value share in total non-alcoholic ready-to-drink (“NARTD”) beverages. Coca-Cola benefited from underlying share gains in both at-home and away-from-home channels. The company’s value share in total NARTD beverages has improved from the 2019 level.
Coca-Cola’s shares gained about 3% in the pre-market trading session, owing to the better-than-expected third-quarter 2021 results and a raised view for 2021. Overall, the Zacks Rank #3 (Hold) stock has declined 4% in the past three months compared with the industry’s fall of 2.7%.
Image Source: Zacks Investment Research
Volume and Pricing
In the reported quarter, concentrate sales were up 8%, while price/mix rose 6%. Currency tailwinds aided the company’s top line by 2%.
Price/mix benefited from pricing actions in the marketplace coupled with favorable channel and package mix due to the lapping of last year’s pandemic-led disruptions. Concentrate sales were 2 points ahead of unit case volume, owing to bottler inventory build to manage through near-term supply disruption.
Coca-Cola’s total unit case volume grew 6% in the third quarter. It was above the 2019 levels, backed by recovery across many markets due to the subsiding of the pandemic-led uncertainties as well as the lapping of last year’s pandemic-led impacts. Growth was mainly led by improved trends in the developing and emerging markets, particularly India, Russia and Brazil. Meanwhile, growth in developed markets was driven by the United States, Great Britain and Mexico.
Category Cluster Performance: In the reported quarter, volume benefited from growth in trademark Coca-Cola; sparkling flavors; the nutrition, juice, dairy and plant-based beverages; and hydration, sports, coffee and tea categories.
Sparkling soft drinks’ unit case volume improved 6% (compared with 14% growth in the prior quarter), driven by robust gains across all geographic operating segments. Trademark Coca-Cola volumes were up 5% (compared with a 12% increase in the last reported quarter) on solid gains in Europe, Middle East & Africa, and Latin America. Moreover, the sparkling flavors category improved 7% on growth in Trademark Sprite and Trademark Fanta.
Volume for nutrition, juice, dairy and plant-based beverages was up 12%. The category primarily gained from growth in Minute Maid Pulpy in China, Mazaa in India, and Del Valle in Mexico.
The hydration, sports, coffee and tea category grew 6% in the third quarter. The company witnessed 5% growth in hydration on growth across all geographies. Sports drinks rose 5%, owing to growth in the United States and Mexico. Tea volume increased 4%, driven by gains in Hajime in Japan and Gold Peak in the United States. The coffee business witnessed 19% growth on the reopening of the Costa retail outlets in the U.K. as the pandemic-led restrictions ease.
Segmental Details
Revenues rose 13% for EMEA, 41% for Latin America, 13% for North America, 3% for the Asia Pacific, 47% for Global Ventures and 13% for Bottling Investments.
Organic revenues improved 13% in EMEA, 33% in Latin America, 13% in North America, 2% in the Asia Pacific, 39% in Global Ventures and 9% in Bottling Investments.
Margins
Comparable currency-neutral operating income rose 11% year over year, driven by robust organic sales growth across all segments, offset by significantly higher marketing investments compared with the prior year. In dollar terms, comparable operating income rose 26% to $2,898 million. The comparable operating margin contracted 40 basis points to 30%.
Guidance
The company raised its organic revenue and comparable earnings per share (EPS) growth guidance for 2021. It estimates organic revenue growth of 13-14% for 2021 compared with 12-14% growth mentioned earlier. The company expects an underlying effective tax rate of 18.6% for 2021 compared with the 19.1% mentioned earlier. It estimates year-over-year comparable EPS growth of 15-17% versus a 12-14% growth rate stated earlier. Notably, the company delivered comparable EPS of $1.95 in 2020.
Comparable net revenues are anticipated to be aided by a 1-2% currency tailwind, based on current rates and hedge positions. Comparable EPS is expected to include currency tailwinds of 2-3%.
The company estimates generating a free cash flow of $10.5 billion for 2021. The free cash flow projection is based on the generation of operating cash flow of $12 billion and capital expenditure of $1.5 billion. Earlier, it predicted free cash flow of at least $9 billion and operating cash flow of at least $10.5 billion.
For fourth-quarter 2021, it anticipates comparable net revenues to include even currency impacts and comparable EPS is expected to be aided by favorable currency movements of 2%, both based on current rates and hedge positions.
Image: Bigstock
Coca-Cola (KO) Rises as Q3 Earnings & Revenues Beat, Ups View
The Coca-Cola Company (KO - Free Report) has reported better-than-expected top and bottom-line results in third-quarter 2021. Moreover, both earnings and sales improved year over year. Results benefited from the company’s strategic transformation and ongoing recovery around the world. Volume growth was driven by continued strength in the at-home channel and improvement in the away-from-home business. Driven by the momentum in its business, the company lifted its 2021 view.
Comparable earnings of 65 cents per share beat the Zacks Consensus Estimate of 58 cents and improved 18% from the year-ago period. Favorable currency translations aided earnings by 3%. Comparable currency-neutral earnings per share rose 14%.
Revenues of $10,042 million surpassed the Zacks Consensus Estimate of $9,591 million and improved 16% year over year. Organic revenues rose 14% from the prior-year quarter. The company’s top line benefited from improved price/mix and an increase in concentrate sales. Revenues gained from the ongoing recovery in markets, where the pandemic-led disruptions are subsiding.
CocaCola Company The Price, Consensus and EPS Surprise
CocaCola Company The price-consensus-eps-surprise-chart | CocaCola Company The Quote
In the reported quarter, the company gained a global value share in total non-alcoholic ready-to-drink (“NARTD”) beverages. Coca-Cola benefited from underlying share gains in both at-home and away-from-home channels. The company’s value share in total NARTD beverages has improved from the 2019 level.
Coca-Cola’s shares gained about 3% in the pre-market trading session, owing to the better-than-expected third-quarter 2021 results and a raised view for 2021. Overall, the Zacks Rank #3 (Hold) stock has declined 4% in the past three months compared with the industry’s fall of 2.7%.
Volume and Pricing
In the reported quarter, concentrate sales were up 8%, while price/mix rose 6%. Currency tailwinds aided the company’s top line by 2%.
Price/mix benefited from pricing actions in the marketplace coupled with favorable channel and package mix due to the lapping of last year’s pandemic-led disruptions. Concentrate sales were 2 points ahead of unit case volume, owing to bottler inventory build to manage through near-term supply disruption.
Coca-Cola’s total unit case volume grew 6% in the third quarter. It was above the 2019 levels, backed by recovery across many markets due to the subsiding of the pandemic-led uncertainties as well as the lapping of last year’s pandemic-led impacts. Growth was mainly led by improved trends in the developing and emerging markets, particularly India, Russia and Brazil. Meanwhile, growth in developed markets was driven by the United States, Great Britain and Mexico.
Category Cluster Performance: In the reported quarter, volume benefited from growth in trademark Coca-Cola; sparkling flavors; the nutrition, juice, dairy and plant-based beverages; and hydration, sports, coffee and tea categories.
Sparkling soft drinks’ unit case volume improved 6% (compared with 14% growth in the prior quarter), driven by robust gains across all geographic operating segments. Trademark Coca-Cola volumes were up 5% (compared with a 12% increase in the last reported quarter) on solid gains in Europe, Middle East & Africa, and Latin America. Moreover, the sparkling flavors category improved 7% on growth in Trademark Sprite and Trademark Fanta.
Volume for nutrition, juice, dairy and plant-based beverages was up 12%. The category primarily gained from growth in Minute Maid Pulpy in China, Mazaa in India, and Del Valle in Mexico.
The hydration, sports, coffee and tea category grew 6% in the third quarter. The company witnessed 5% growth in hydration on growth across all geographies. Sports drinks rose 5%, owing to growth in the United States and Mexico. Tea volume increased 4%, driven by gains in Hajime in Japan and Gold Peak in the United States. The coffee business witnessed 19% growth on the reopening of the Costa retail outlets in the U.K. as the pandemic-led restrictions ease.
Segmental Details
Revenues rose 13% for EMEA, 41% for Latin America, 13% for North America, 3% for the Asia Pacific, 47% for Global Ventures and 13% for Bottling Investments.
Organic revenues improved 13% in EMEA, 33% in Latin America, 13% in North America, 2% in the Asia Pacific, 39% in Global Ventures and 9% in Bottling Investments.
Margins
Comparable currency-neutral operating income rose 11% year over year, driven by robust organic sales growth across all segments, offset by significantly higher marketing investments compared with the prior year. In dollar terms, comparable operating income rose 26% to $2,898 million. The comparable operating margin contracted 40 basis points to 30%.
Guidance
The company raised its organic revenue and comparable earnings per share (EPS) growth guidance for 2021. It estimates organic revenue growth of 13-14% for 2021 compared with 12-14% growth mentioned earlier. The company expects an underlying effective tax rate of 18.6% for 2021 compared with the 19.1% mentioned earlier. It estimates year-over-year comparable EPS growth of 15-17% versus a 12-14% growth rate stated earlier. Notably, the company delivered comparable EPS of $1.95 in 2020.
Comparable net revenues are anticipated to be aided by a 1-2% currency tailwind, based on current rates and hedge positions. Comparable EPS is expected to include currency tailwinds of 2-3%.
The company estimates generating a free cash flow of $10.5 billion for 2021. The free cash flow projection is based on the generation of operating cash flow of $12 billion and capital expenditure of $1.5 billion. Earlier, it predicted free cash flow of at least $9 billion and operating cash flow of at least $10.5 billion.
For fourth-quarter 2021, it anticipates comparable net revenues to include even currency impacts and comparable EPS is expected to be aided by favorable currency movements of 2%, both based on current rates and hedge positions.
Don’t Miss These Better-Ranked Stocks
The Duckhorn Portfolio, Inc. (NAPA - Free Report) presently carries a Zacks Rank #2 (Buy). The company has a long-term earnings growth rate of 9.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Helen of Troy Limited (HELE - Free Report) has an expected long-term earnings growth rate of 8%. It currently has a Zacks Rank #2.
Archer Daniels Midland Company (ADM - Free Report) currently carries a Zacks Rank #2. It has a long-term earnings growth rate of 9%.