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Will Coca-Cola’s Q4 Results Continue Exceeding Expectations?



Upcoming results

The Coca-Cola Company (KO) is scheduled to announce its fourth-quarter earnings results on February 14. Coca-Cola exceeded analysts’ expectations in each of the first three quarters of the year. The company’s volumes have been improving on a year-over-year basis backed by its efforts to innovate better beverages with low- or no-sugar options. Coca-Cola’s marketing efforts have also helped it to enhance its volumes. Coca-Cola’s unit case volumes grew 2% in the first nine months of 2018 led by strength in the trademark Coca-Cola brand.

Coca-Cola is also innovating new flavors to address changing consumer tastes. Effective February 25, the company will offer Orange Vanilla Coke and Orange Vanilla Coke Zero Sugar in the US market. After over a decade, the company is offering a new flavor under its trademark Coca-Cola brand.

Coca-Cola’s productivity efforts and its refranchising of its bottling operations have enhanced its gross and operating margins in the first nine months of 2018.

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Stock movements and analysts’ ratings

As of February 10, Coca-Cola stock was rated as a “buy” by 13 out of 24 analysts (or 54%). Eleven analysts had “hold” recommendations on the stock, while none had “sell” recommendations. Following the company’s third-quarter earnings results in October, there has been only one change in analysts’ ratings for Coca-Cola. On December 13, UBS lowered its rating for Coca-Cola from a “buy” to a “neutral” but raised its price target to $51 from $50.

As of February 10, the 12-month average price target for Coca-Cola stock was $51.88, implying a potential rise of ~5%. Coca-Cola stock has risen 4.5% since the start of 2019, better than the 2.3% rise in PepsiCo (PEP) stock but worse than the 8.0% rise in the S&P 500 Index as of February 9.

In the next part of this series, we’ll discuss analysts’ expectations for Coca-Cola’s fourth-quarter revenue.


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