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Coca-Cola Q4 Preview: Another EPS Beat Inbound?

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Earnings season is undoubtedly one of the most critical periods for stocks, with investors finally getting an update on business conditions.

Investors always stay busy during earnings season, with an extensive list of companies reporting daily.

And in the coming weeks, there will be just as many.

Now, a titan in the Zacks Consumer Staples sector, The Coca-Cola Company (KO - Free Report) , is slated to unveil its quarterly results on Tuesday, February 14th, before the market open.

Coca-Cola is an American multinational corporation best known for its flagship Coca-Cola beverage. KO’s strong brand equity, marketing, research, and innovation help it to garner a market share of more than 40% in the non-alcoholic beverage industry.

How does the company stack up heading into the quarterly release? We can use the results just received from a peer, PepsiCo (PEP - Free Report) , as a small gauge. Let’s take a closer look.  

PepsiCo Q4

PepsiCo posted strong quarterly results, reporting earnings per share of $1.67 and beating the Zacks Consensus Estimate by nearly 2%.

PepsiCo generated $28 billion in revenue throughout the quarter, handily beating expectations by more than 10% and growing 11% year-over-year. Impressively, it represented the company’s third consecutive double beat.

In addition, the company provided uplifting FY23 guidance; PEP expects to deliver year-over-year organic revenue growth of 6% and earnings growth of 8%.

Putting their shareholder nature on full display, the company announced a 10% increase in the annual dividend, with the June 2023 payment representing PEP’s 51st consecutive year of increased payouts.

And for the cherry on top, PepsiCo unveiled a $1 billion share buyback program.

“We are pleased with our results for the fourth quarter and the full year as our business remained resilient and delivered another strong year of growth. Our results demonstrate that the investments we have made in our people, brands, portfolio, value chain, and go-to-market systems are working,” said CEO Ramon Laguarta.

Now, onto Coca-Cola.

The Coca-Cola Company

Quarterly Estimates –

Analysts have primarily had mixed reactions to the quarter to be reported, with a singular downward and upward earnings estimate revision hitting the tape. The Zacks Consensus EPS Estimate of $0.45 indicates no change in earnings from the year-ago quarter.

Zacks Investment Research
Image Source: Zacks Investment Research

Our consensus revenue estimate stands at $10 billion, suggesting a positive change of roughly 6% year-over-year.

Quarterly Performance –

Coca-Cola has an impressive earnings track record, exceeding earnings and revenue estimates in seven consecutive quarters.

In its latest release, the company penciled in a 7.8% bottom line beat and reported revenue 4.4% above expectations. Below is a chart illustrating the company’s revenue on a quarterly basis.

Zacks Investment Research
Image Source: Zacks Investment Research

Valuation –

Coca-Cola shares currently trade at a 23.4X forward earnings multiple, below the 24.7X five-year median and highs of 27.1X in 2022.

Zacks Investment Research
Image Source: Zacks Investment Research

Further, the company’s forward price-to-sales currently sits at 5.9X, below the 6.2X five-year median.

Zacks Investment Research
Image Source: Zacks Investment Research

KO carries a Style Score of “C” for Value.

Putting Everything Together

Earnings season is always a thrilling time to be an investor, with companies finally providing an updated state on business conditions.

And next week, we’ll receive results from The Coca-Cola Company on Tuesday, February 14th, before the market open.

We’ve just gotten results from PepsiCo (PEP - Free Report) , with the company posting strong numbers and exceeding top and bottom line expectations.

Analysts have had mixed reactions to Coca-Cola's print, with estimates suggesting zero change in earnings year-over-year but an uptick in revenue.

In addition, the company has consistently posted better-than-expected results, chaining together a long streak of double beats.

Heading into the release, The Coca-Cola Company (KO - Free Report) is a Zacks Rank #2 (Buy) with an Earnings ESP Score of 0.8%.


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