Uncovering the Expectations for Coca-Cola’s Q3 Earnings Report – Analysis by Dr. Anosh Ahmed

October 27, 2022 at 15:00 PM EDT

Houston, Texas, United States - 10-27-2022 (PR Distribution™) -

On October 25, 2022, Coca-Cola (NASDAQ: COKE) is expected to release the results of its third fiscal quarter in its Q3 earnings report. In this comprehensive overview, Dr. Anosh Ahmed provides a thorough analysis of the most prevalent market factors and views on Coca-Cola’s Q3 earnings report.

Coca-Cola-s-Q3-earnings-report

Source: Seeking Alpha

Quick Facts about Coca-Cola’s Past Performance

Since its founding in the 19th century, the well-known soft drink manufacturer Coca-Cola in Atlanta, Georgia, has undergone significant changes in its business operations. The corporation now boasts a diverse portfolio of brands, including Coca-Cola Classic, Sprite, and Fanta, and a wide variety of hydration, sports, coffee, tea, juice, dairy, and plant-based beverages.

Dr. Anosh Ahmed points out that Coca-Cola Company has a market valuation of $238.2 billion as of October 21, 2022, placing it in the top percentile of all firms operating in the Non-Alcoholic Beverages sector.

Currently, the price-earnings ratio for Coca-Cola Company is 25.4,
With a profit margin of 23.2%, Coca-Cola Company has reported a trailing twelve-month sale of $41.3 billion.
Looking at the most recent quarterly gain in revenue, compared to the same period last year, it was 11.8%.
For the current financial year, analysts forecast that the company will have adjusted profits of $2.458 per share. At this time, the dividend yield for Coca-Cola Company is 3.1%.
On Friday, October 21, 2022, the price of Coca-Cola shares increased by 1.60 %, from $55.08 to $59.60. During the previous trading day, the price varied by 2.04% from a day low of $54.99 to a day high of $56.11.
Over the last two weeks, the price has grown by 2.66 % and increased six of the previous ten days. In all, 15 million shares were purchased and sold for about $842.05 million on the last trading day, which saw a decline in the volume of -2 million shares.

At the most recent earnings conference for the company, Coca-chief Cola's financial officer, John Murphy, revealed that he anticipates organic sales growth to reach 12% to 13% year-on-year in the third quarter, which is an increase from his previous prediction of 7% to 8% growth.

Murphy also stated that he maintains his expectation of comparable EPS growth of 5% to 6% throughout 2021, as well as his outlook on generating US$10.5 billion worth of free cash flow for 2022 – derived from approximately US$12 billion in cash from operations, less an estimated US$1.5 billion in capital investments. In addition, Murphy stated that he maintains his outlook on generating US$10.5 billion worth of free cash flow for 2022.

cash-flow-for-2022

Source: Seeking Alpha

Uncovering the Market Expectations about Coca-Cola’s Q3 Earnings

Both Yahoo Finance and Nasdaq reported views that when Coca-Cola releases its results for the quarter that ended in September 2022, the market anticipates the company will post a year-over-year fall in profits while also reporting greater sales due to increasing supply complications and heightened commodity costs.

According to Dr. Anosh Ahmed, this generally known consensus forecast is crucial when evaluating the company's earnings picture; nevertheless, a major aspect that could impact the stock price in the near future is how the actual results compare to these expectations.

In its forthcoming quarterly report, the world's biggest beverage manufacturer is anticipated to disclose quarterly profits of $0.64 per share, representing a year-over-year decline of 1.5%. Nevertheless, revenues are anticipated to increase by 5.6% over the same period last year, reaching $10,6 billion.

Assessing Past Quarters’ Earnings Results

Recent quarters' results for Coca-Cola have been helped along by the company's continuing strategic change as well as the continued economic recovery throughout the globe. Dr. Anosh Ahmed highlights that a wide variety of products and services have been essential in driving robust revenue production in recent times, with the company's solid second-quarter 2022 statistics being supported by the continuous rebound in away-from-home consumption as well as low price elasticity. Despite the persisting difficulties on a worldwide scale, it is anticipated that the market's flexibility would have been beneficial to the amount of business conducted by the firm during the third quarter.

Net-Sales-third-quarter

Source: Market Screener

Divergent Views for Coca-Cola’s Q3 Earnings Report

This year, Coca-Cola has been experiencing challenges from greater supply-chain costs, particularly rising commodity input prices and transportation charges. These costs have been putting a strain on the company. Dr. Anosh Ahmed asserts that there is a good chance that the company's performance in the third quarter was hindered by the pressures brought on by the rise in input prices as well as other charges.

In addition, Coca-Cola has increased its expenditure on consumer-facing efforts to assist its sales growth and has invested in its various markets and brands. As a consequence, marketing budgets were increased throughout the course of the last several quarters. It is anticipated that higher marketing expenditure, as well as a rise in both short-term incentives and stock-based pay, contributed to an increase in selling, general, and administrative costs during the third quarter.

Upcoming-Quarter-s-Earning

Source: Seeking Alpha

On the other side of the spectrum, Trefis indicates that significant revenue growth across all of Coca-Cola's operational divisions probably contributed to the company's top-line growth during the third quarter. This development was assisted by an improved price/mix and a rise in concentrate sales. Sales improvements from underlying share gains probably helped the performance during the third quarter. These share gains occurred in both at-home and away-from-home channels.

As Dr. Anosh Ahmed postulates, there are some positive outlooks predicting that the gains from innovations and rising digital investments will express themselves in Coca-financial Cola's results for the third quarter. The firm has seen a surge in e-commerce, with the growth rate of the channel tripling in many different nations. This has resulted in an increase in revenue for the company, as the company is continuously enhancing consumer relationships and piloting various digitally enabled initiatives through fulfillment methods to capture the online demand. These variables may contribute to the increase in Q3 sales.

EPS-Quarter-Rate-of-Surprise