Can Coca-Cola’s Investors Expect Improvement in 3Q17?



3Q17 results

Beverage giant Coca-Cola (KO) is slated to announce its 3Q17 results on October 25. On October 18, the company’s stock price rose 11.9% to $46.40 on a YTD (year-to-date) basis. Coca-Cola has been struggling to grow its top line in the past few quarters due to low soda volumes and structural changes.

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Comparison with rivals

On October 18, the stock prices of Coca-Cola’s nonalcoholic beverage peers PepsiCo (PEP), Dr Pepper Snapple (DPS), and Monster Beverage (MNST) returned 7.0%, -1.7%, and 27.0%, respectively, since the start of 2017.

Except for Monster Beverage, the aforementioned nonalcoholic beverage stocks have underperformed the S&P 500 Index, which has risen 14.4% on a YTD basis. 

The Consumer Staples Select Sector SPDR ETF (XLP) has risen 5.0% on a YTD basis. The XLP ETF has 25% exposure to beverage stocks.

Series overview

Coca-Cola exceeded analysts’ revenue and earnings expectations in 2Q17. However, the company’s revenues and earnings declined on a year-over-year basis in 2Q17. 

The company has a huge exposure to soda beverages. US soda volumes declined for the 12th consecutive year in 2016, reflecting persistent weakness in the soda beverage category.

In this series on Coca-Cola, we’ll discuss analysts’ expectations for the company’s 3Q17 revenues and earnings. We’ll also discuss the company’s volumes and valuation. We’ll also look into analysts’ recommendations for Coca-Cola stock.

The next part of this series will examine analysts’ estimates for Coca-Cola’s 3Q17 revenues.


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