Reports Wednesday 21 July before the market opens
Expected Revenue: $9.3 Billion
EPS: $0.56
When Coca-Cola (NYSE:) reports its latest quarterly results before opening tomorrow, sales are expected to have already recovered to pre-pandemic levels with the economic reopening in the world's most vaccinated Nations. ]
Weekly Coca-Cola Chart.
Analyst consensus estimates suggest earnings of $0.56 per share for the period ended June 30, up from $0.42 per share. Sales are expected to rise to $9.3 billion, up 29% from the same period a year ago as the world struggled with the first wave of COVID-19 infections, forcing theaters and restaurants to close. stay.
In April, Coke confirmed his forecast of organic sales growth in the high single digits in 2021 and comparable earnings per share growth in the high single digit to low double digits. However, these estimates may still be optimistic for the consumer giant amid rising coronavirus cases in some parts of the world, including highly vaccinated countries such as the UK.
This resurgence in infections has prompted many investors to lower their expectations of economic growth in the coming months. Coke, for its part, has already warned investors, calling the recovery in sales "asynchronous." For example, unit box volume declined 6% in North America during the first quarter, but increased 9% in Asia Pacific. Global unit volume was stable.
Inflation risks
Another risk faced by packaged consumer companies is the rise in the price of the materials they use. For cola, it's the higher cost of plastic and aluminum. Chief Financial Officer John Murphy told Bloomberg in April that the company is "well hedged" to withstand much of the cost pressures in the near term, but next year could be challenging.
Despite these challenges, some analysts believe Coca-Cola may be able to beat estimates this year as the consensus underestimates recovery from the pandemic.
Chart courtesy of Investing.com
Of the 26 analysts surveyed by Investing.com, the majority of respondents gave the stock an "outperform" rating. Morgan Stanley also reiterated its overweight assessment of the stock in a recent note and raised its price target from $60 to $64 per share.
“Short term, we are seeing a post-COVID topline/EPS recovery well above consensus; longer term, a return to pre-COVID outsized sales growth relative to peers, improved execution in a reorganization and higher margins with productivity and lower marketing spend.
To mitigate the impact of a slump in sales, Coke said in December it would cut 2,200 jobs. It has also narrowed its focus on core brands and dropped smaller ones like Tab, a diet soda popular in the 1970s, and Zico coconut water.
KO shares, after recovering from their pandemic plunge, have been flat this year. They closed Monday at $55.73.
Starting point
Coke continues to be a solid dividend stock for long-term investors, with a 3% yield and a quarterly payout of $0.42. The company has now increased its dividend for 58 years in a row.
We believe Coke is a good defensive game, especially as risks to growth stocks have increased in the face of a resurgent pandemic that is pushing investors to seek refuge in safe consumer stocks.
