Coca-Cola Beats Analysts’ 2Q17 Earnings Expectations



Earnings beat estimates

Coca-Cola (KO) delivered adjusted EPS (earnings per share) of $0.59 in 2Q17, beating the consensus analysts’ expectation of $0.57. The company declared its 2Q17 results on July 26. Coca-Cola had missed analysts’ earnings expectation in 1Q17.

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Year-over-year decline

Coca-Cola’s adjusted EPS continued to decline on a year-over-year basis in 2Q17. The company’s 2Q17 adjusted EPS was down 1.7% on a year-over-year basis compared to $0.60 in 2Q16. Lower revenue, adverse currency fluctuations, and costs related to the company’s refranchising efforts had a negative impact on the company’s bottom line in 2Q17. Coca-Cola is refranchising its bottling operations to reduce its exposure to the lower-margin bottling business and to transform itself into a higher-margin, capital-light business. The company is on track to complete the refranchising of its bottling operations in the US territories by the end of 2017.

In comparison, Coca-Cola’s adjusted EPS fell 4.4% in 1Q17 and by 4.8% in 2Q16.

Closest rival PepsiCo (PEP) delivered adjusted EPS of $1.44 in fiscal 2Q17, surpassing the consensus analyst estimate of $1.40. The company’s adjusted EPS grew 6.7% in 2Q17, driven by higher revenue and a lower effective tax rate.

Guidance raised

Coca-Cola now expects its adjusted EPS in 2017 to be flat to down 2% compared to $1.91 in 2016. The company had earlier expected its 2017 adjusted EPS to fall 1% to 3%, compared to 2016. The improvement in the 2017 earnings guidance came in against the backdrop of a slightly better forex environment in the second half of the year.

Let’s take a closer look at Coca-Cola’s 2Q17 revenue in the next part of this series.


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