Coca-Cola Posts Q4 Earnings, Strong Run Continues



Coca-Cola (NYSE:KO) continued its strong performance in yet another quarter. The company reported strong results for the fourth quarter of fiscal 2019 on Thursday. The stock rose by 2.9% mid-afternoon. Coca-Cola closed with a gain of 3.2% on Thursday. The company beat analysts’ revenue expectations, while it was in line with the earnings estimates.

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Coca-Cola’s strong Q4 earnings

Coca-cola continued its strong performance in the fourth quarter. The net revenues rose 16% YoY (year-over-year) to $9.1 billion and beat analysts’ estimates of $8.8 billion. The organic revenue also increased by 7% for the quarter. The company mentioned in its press release that its revenue growth was driven by concentrate sales growth of 2% and price or mix growth of 5%. Coca-Cola also saw an increase of 2.3% YoY in its EPS to $0.44. The earnings were in line with analysts’ estimates. For the quarter, the company’s operating margin rose to 23.9% compared to 23.4% in the fourth quarter of 2018.

For fiscal 2019, the company reported a 17.0% increase in its revenue to $37.2 billion. The EPS also rose by 1.4% to $2.44. Newly launched beverages drove Coca-Cola’s revenue growth. The company saw growth in all of its geographic segments. Coca-Cola saw a 3% growth in sparkling soft drinks in China, Brazil, and Southeast Asia.

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Fiscal 2020 guidance

The company is very positive about fiscal 2020. For the first quarter of fiscal 2020, Coca-Cola expects a 0%–1% positive effect from acquisitions, divestitures, and structural items. However, currency headwinds could have a slight impact on the company’s revenues.

In fiscal 2020, the company expects to see around 5% growth in organic revenues and 8% growth in comparable currency neutral operating income. Coca-Cola expects its net revenues to be hit slightly by acquisitions, divestitures, structural items, and currency headwinds. The company expects to see a 7% rise in the comparable EPS to $2.25 in fiscal 2020.

Analysts’ recommendations for Coca-Cola

Coca-Cola’s impressive fourth-quarter results got attention from analysts who seemed confident in the stock. As a result, many analysts increased the target price for the stock on Thursday. Citigroup increased the target price to $63 from $58. Jefferies raised the target price to $60 from $56. Evercore ISI increased the target price $65 from $60, while HSBC raised it to $61 from $55. Analysts’ recommendations for the stock stayed the same. Analysts are still bullish on Coca-Cola stock. The stock has a majority “buy” rating. In comparison, PepsiCo (NYSE:PEP) stock has a majority “hold” rating.

Currently, analysts increased the average target price on Coca-Cola stock to $61.45. The target price is 4% higher than its last closing price. The stock closed with a gain of 3.2% on Thursday. Coca-Cola stock has gained 6.3% year-to-date.

In comparison, the average target price on PepsiCo stock is still $140.28 with no change. The target price is 2% lower than the last closing price. The stock closed with a gain of 1.4%.


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