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What Do Analysts Expect from Coca-Cola’s Fiscal 2016 Revenue?



Declining trend

Coca-Cola’s (KO) revenue has declined for the last three consecutive years. Weak soda volumes, unfavorable foreign currency movements, and structural changes have adversely impacted the company’s top line. We discussed some of the company’s efforts to improve its revenue in previous parts of this series.

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Company’s expectations

As mentioned in Part 1 of this series, Coca-Cola’s quarterly revenue (KO) has declined for the last five consecutive quarters. Most recently, the company’s fiscal 2Q16 revenue declined 5.1% on a year-over-year basis.

In the first half of fiscal 2016, Coca-Cola’s revenue fell about 5%. However, the company’s organic revenue rose 2% in the first half of fiscal 2016, driven by favorable prices and product mix. Organic revenue excludes the impact of currency headwinds, structural items, and acquisitions and divestitures.

Based on the guidance issued in July 2016, Coca-Cola expects its fiscal 2016 organic revenue to grow 3%. The company expects acquisitions, divestitures, and structural items to have a 6%–7% adverse impact on its fiscal 2016 net revenue. Currency headwinds are expected to drag down the fiscal 2016 net revenue by 2%–3%.

Analysts’ expectations

Currently, analysts expect Coca-Cola’s revenue to rise 6% to $41.6 billion in fiscal 2016. This decline is expected to be caused by weakness in the company’s carbonated soft drink volumes and adverse currency fluctuations.

Analysts expect the fiscal 2016 revenue of PepsiCo (PEP), Dr Pepper Snapple (DPS), and Monster Beverage (MNST) to grow -0.6%, 2.1%, and 12.5%, respectively.

We’ll discuss the company’s valuation in the next part of this series.


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