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Here's Why Coca-Cola (KO) Looks Poised for Earnings Beat in Q4
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The Coca-Cola Company (KO - Free Report) is expected to register top-line growth when it reports fourth-quarter 2023 numbers on Feb 13, before the opening bell. The Zacks Consensus Estimate for the company’s fourth-quarter revenues is pegged at $10.6 billion, suggesting 5% growth from the prior-year quarter’s reported figure.
For fourth-quarter earnings, the consensus mark is pegged at 48 cents, indicating 6.7% growth from the year-ago quarter’s reported figure. The consensus mark has been unchanged in the past 30 days.
For 2023 earnings, the Zacks Consensus Estimate is pegged at $2.68 per share, suggesting 8.1% growth from the year-ago quarter’s reported figure. The consensus mark has been unchanged in the past 30 days. The consensus estimate for the company’s 2023 revenues is pegged at $45.5 billion, implying 5.8% growth from the prior-year quarter’s reported figure.
In the last reported quarter, the leading soft drink behemoth’s earnings beat the Zacks Consensus Estimate by 7.3%. The company has delivered an earnings surprise of 5.1%, on average, in the trailing four quarters.
Coca-Cola’s performances in recent quarters have been benefiting from strategic transformation and ongoing recovery around the world. The company’s fourth-quarter performance is expected to have gained from revenue growth across its operating segments, aided by an improved price/mix and an increase in concentrate sales. Underlying share gains in at-home and away-from-home channels are also expected to have bolstered the performance.
The company’s volumes in the fourth quarter are expected to have benefited from the ongoing recovery in markets. Category-wise, volumes have been benefiting from growth in trademark Coca-Cola; sparkling flavors; the nutrition, juice, dairy and plant-based beverages; and hydration, sports, coffee and tea categories.
Our model predicts year-over-year organic revenue growth of 8.8% for the fourth quarter, mainly driven by 6.9% growth of the price/mix and a 1.9% rise in concentrate sales volume. Consequently, reported revenue growth is expected to be 3.9%. For 2023, our model estimates organic revenue growth of 10.7%, with a 9.3% rise in price/mix and a 1.5% increase in concentrate sales.
Coca-Cola’s fourth-quarter and 2023 results are likely to reflect gains from innovations and accelerating digital investments. The company has been witnessing a splurge in e-commerce, with the growth rate of the channel doubling in many countries. KO has been accelerating investments to build strong digital capabilities. It has been consistently strengthening consumer connections and piloting various digital initiatives through fulfillment methods to capture online demand, which is likely to have boosted fourth-quarter sales.
However, KO has been witnessing inflationary cost pressures, related to higher commodity and material costs, as well as higher marketing investments. The elevated commodity costs have been hurting the company’s cost of goods sold (COGS). The pressures from input cost inflation and other costs are likely to have hurt the company’s performance in the fourth quarter.
On the last reported quarter’s earnings call, management anticipated inflationary cost pressures to impact several aspects of the business in 2023, including input costs, transportation, marketing and operating expenses. KO expects impacts of a mid-single-digit percentage from commodity price inflation on the comparable COGS for 2023. Our model predicts a 1.9% year-over-year increase in the cost of products sold in the fourth quarter and a 3.1% year-over-year rise for 2023.
Coca-Cola has been investing in its markets and brands to support sales growth, with higher spending on consumer-facing activities. The company has been significantly increasing its marketing investments to engage and retain existing consumers, and attracting new ones. This has led to increased marketing investments in the past few quarters. Rising marketing spending is expected to have led to increased selling, general and administrative (SG&A) expenses in the fourth quarter and 2023.
Our model predicts SG&A expenses of $13.8 billion for 2023, suggesting year-over-year growth of 6.8%, mainly driven by a continued rise in marketing expenses. We estimate SG&A expenses to increase 4% year over year in fourth-quarter 2023. As a percentage of sales, we expect adjusted SG&A expenses to increase 40 basis points (bps) and 50 bps, respectively, in the fourth quarter and 2023.
On the last reported quarter’s earnings call, the company expected adverse currency rates to hurt fourth-quarter comparable revenues by 4% and comparable earnings per share by 8%. The company also expects currency headwind to impact comparable revenues by 4% and comparable earnings per share by 6% in 2023. Additionally, revenues are expected to reflect a 1% negative impact of acquisitions, divestitures and structural changes in the fourth quarter and 2023. Our model estimates revenues to be impacted by currency headwinds of 4% each in the fourth quarter and 2023.
Zacks Model
Our proven model conclusively predicts 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 odds of an earnings beat. 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 +0.70%.
Other Stocks With Favorable Combination
Here are some other companies you may want to consider, as our model shows that they also have the right combination of elements to deliver an earnings beat.
Molson Coors (TAP - Free Report) currently has an Earnings ESP of +2.72% and a Zacks Rank #2. The company is expected to register top-line growth when it reports fourth-quarter 2023 numbers. The Zacks Consensus Estimate for TAP’s quarterly revenues is pegged at $2.8 billion, which suggests growth of 5.4% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for Molson Coors’ quarterly earnings has moved down by a penny in the past 30 days to $1.12 per share. The estimate suggests a 13.9% decline from the year-ago reported quarter. TAP has delivered an earnings surprise of 41.3%, on average, in the trailing four quarters.
Dutch Bros (BROS - Free Report) currently has an Earnings ESP of +9.38% and a Zacks Rank #3. BROS is anticipated to register top-line growth when it reports fourth-quarter 2023 results. The Zacks Consensus Estimate for Dutch Bros’ quarterly revenues is pegged at $254.8 million, indicating growth of 26.3% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Dutch Bros’ earnings has moved down by a penny in the past 30 days to 2 cents per share. The consensus estimate suggests a 33.3% decline from the prior-year quarter’s reported figure. BROS has delivered an earnings beat of 57.1%, on average, in the trailing four quarters.
Monster Beverage (MNST - Free Report) has an Earnings ESP of +1.65% and a Zacks Rank #3 at present. MNST is likely to register top and bottom-line growth when it releases fourth-quarter 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.8 billion, which suggests growth of 15.9% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Monster Beverage’s quarterly earnings has been unchanged in the past 30 days at 39 cents per share, suggesting growth of 34.5% from the year-ago quarter’s reported number. MNST has delivered an earnings surprise of 1.9%, on average, in the trailing four quarters.
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Here's Why Coca-Cola (KO) Looks Poised for Earnings Beat in Q4
The Coca-Cola Company (KO - Free Report) is expected to register top-line growth when it reports fourth-quarter 2023 numbers on Feb 13, before the opening bell. The Zacks Consensus Estimate for the company’s fourth-quarter revenues is pegged at $10.6 billion, suggesting 5% growth from the prior-year quarter’s reported figure.
For fourth-quarter earnings, the consensus mark is pegged at 48 cents, indicating 6.7% growth from the year-ago quarter’s reported figure. The consensus mark has been unchanged in the past 30 days.
For 2023 earnings, the Zacks Consensus Estimate is pegged at $2.68 per share, suggesting 8.1% growth from the year-ago quarter’s reported figure. The consensus mark has been unchanged in the past 30 days. The consensus estimate for the company’s 2023 revenues is pegged at $45.5 billion, implying 5.8% growth from the prior-year quarter’s reported figure.
In the last reported quarter, the leading soft drink behemoth’s earnings beat the Zacks Consensus Estimate by 7.3%. The company has delivered an earnings surprise of 5.1%, on average, in the trailing four quarters.
CocaCola Company (The) Price and EPS Surprise
CocaCola Company (The) price-eps-surprise | CocaCola Company (The) Quote
Key Points to Note
Coca-Cola’s performances in recent quarters have been benefiting from strategic transformation and ongoing recovery around the world. The company’s fourth-quarter performance is expected to have gained from revenue growth across its operating segments, aided by an improved price/mix and an increase in concentrate sales. Underlying share gains in at-home and away-from-home channels are also expected to have bolstered the performance.
The company’s volumes in the fourth quarter are expected to have benefited from the ongoing recovery in markets. Category-wise, volumes have been benefiting from growth in trademark Coca-Cola; sparkling flavors; the nutrition, juice, dairy and plant-based beverages; and hydration, sports, coffee and tea categories.
Our model predicts year-over-year organic revenue growth of 8.8% for the fourth quarter, mainly driven by 6.9% growth of the price/mix and a 1.9% rise in concentrate sales volume. Consequently, reported revenue growth is expected to be 3.9%. For 2023, our model estimates organic revenue growth of 10.7%, with a 9.3% rise in price/mix and a 1.5% increase in concentrate sales.
Coca-Cola’s fourth-quarter and 2023 results are likely to reflect gains from innovations and accelerating digital investments. The company has been witnessing a splurge in e-commerce, with the growth rate of the channel doubling in many countries. KO has been accelerating investments to build strong digital capabilities. It has been consistently strengthening consumer connections and piloting various digital initiatives through fulfillment methods to capture online demand, which is likely to have boosted fourth-quarter sales.
However, KO has been witnessing inflationary cost pressures, related to higher commodity and material costs, as well as higher marketing investments. The elevated commodity costs have been hurting the company’s cost of goods sold (COGS). The pressures from input cost inflation and other costs are likely to have hurt the company’s performance in the fourth quarter.
On the last reported quarter’s earnings call, management anticipated inflationary cost pressures to impact several aspects of the business in 2023, including input costs, transportation, marketing and operating expenses. KO expects impacts of a mid-single-digit percentage from commodity price inflation on the comparable COGS for 2023. Our model predicts a 1.9% year-over-year increase in the cost of products sold in the fourth quarter and a 3.1% year-over-year rise for 2023.
Coca-Cola has been investing in its markets and brands to support sales growth, with higher spending on consumer-facing activities. The company has been significantly increasing its marketing investments to engage and retain existing consumers, and attracting new ones. This has led to increased marketing investments in the past few quarters. Rising marketing spending is expected to have led to increased selling, general and administrative (SG&A) expenses in the fourth quarter and 2023.
Our model predicts SG&A expenses of $13.8 billion for 2023, suggesting year-over-year growth of 6.8%, mainly driven by a continued rise in marketing expenses. We estimate SG&A expenses to increase 4% year over year in fourth-quarter 2023. As a percentage of sales, we expect adjusted SG&A expenses to increase 40 basis points (bps) and 50 bps, respectively, in the fourth quarter and 2023.
On the last reported quarter’s earnings call, the company expected adverse currency rates to hurt fourth-quarter comparable revenues by 4% and comparable earnings per share by 8%. The company also expects currency headwind to impact comparable revenues by 4% and comparable earnings per share by 6% in 2023. Additionally, revenues are expected to reflect a 1% negative impact of acquisitions, divestitures and structural changes in the fourth quarter and 2023. Our model estimates revenues to be impacted by currency headwinds of 4% each in the fourth quarter and 2023.
Zacks Model
Our proven model conclusively predicts 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 odds of an earnings beat. 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 +0.70%.
Other Stocks With Favorable Combination
Here are some other companies you may want to consider, as our model shows that they also have the right combination of elements to deliver an earnings beat.
Molson Coors (TAP - Free Report) currently has an Earnings ESP of +2.72% and a Zacks Rank #2. The company is expected to register top-line growth when it reports fourth-quarter 2023 numbers. The Zacks Consensus Estimate for TAP’s quarterly revenues is pegged at $2.8 billion, which suggests growth of 5.4% from the prior-year quarter’s reported figure.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Molson Coors’ quarterly earnings has moved down by a penny in the past 30 days to $1.12 per share. The estimate suggests a 13.9% decline from the year-ago reported quarter. TAP has delivered an earnings surprise of 41.3%, on average, in the trailing four quarters.
Dutch Bros (BROS - Free Report) currently has an Earnings ESP of +9.38% and a Zacks Rank #3. BROS is anticipated to register top-line growth when it reports fourth-quarter 2023 results. The Zacks Consensus Estimate for Dutch Bros’ quarterly revenues is pegged at $254.8 million, indicating growth of 26.3% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Dutch Bros’ earnings has moved down by a penny in the past 30 days to 2 cents per share. The consensus estimate suggests a 33.3% decline from the prior-year quarter’s reported figure. BROS has delivered an earnings beat of 57.1%, on average, in the trailing four quarters.
Monster Beverage (MNST - Free Report) has an Earnings ESP of +1.65% and a Zacks Rank #3 at present. MNST is likely to register top and bottom-line growth when it releases fourth-quarter 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.8 billion, which suggests growth of 15.9% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Monster Beverage’s quarterly earnings has been unchanged in the past 30 days at 39 cents per share, suggesting growth of 34.5% from the year-ago quarter’s reported number. MNST has delivered an earnings surprise of 1.9%, on average, in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.