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Q3 Earnings Preview for Coca-Cola (NYSE:KO)

in EARNINGS/INVESTING IDEAS by

The Coca-Cola Company (NYSE:KO) is scheduled to report Q3 earnings results before markets open for trading on October 22, 2020.

The company is expected to report earnings of $0.46/share on revenue of $8.366 billion. The consensus earnings per share (EPS) of $0.46/share is based on a poll of 19 analysts and represents a decline in eps of −17.4% over the same quarter last year, when the company reported earnings of $0.56/share.

The revenue forecast of $8.366 billion based on a poll of 15 analysts implies a year-over-year (YoY) decline in revenue of −11.9%. Last year the company reported $9.5 billion in revenue for the quarter.

Expected to report EPS contraction of −17.4% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $8,365.63 $9,500.00 −11.9%
EPS $0.46 $0.56 −17.4%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, and met expectations 3 quarters.

What are your expectations from The Coca-Cola Company for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.41 $0.42 2.4% Beat
Q1, 2020 $0.44 $0.51 14.6% Beat
Q4, 2019 $0.44 $0.44 0.6% Beat
Q3, 2019 $0.56 $0.56 −0.5% Missed
Q2, 2019 $0.61 $0.63 2.4% Beat
Q1, 2019 $0.46 $0.48 3.7% Beat
Q4, 2018 $0.43 $0.43 0.1% Beat
Q3, 2018 $0.55 $0.58 6.0% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 26, 2020, the stock price reacted by increasing 5.1%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 21, 2020 $46.12 $48.48 5.1% Increase
April 21, 2020 $46.53 $45.68 −1.8% Decline
January 30, 2020 $57.01 $58.40 2.4% Increase
October 18, 2019 $53.79 $54.78 1.8% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.69, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.69 implies a 0.4% chance of earnings manipulation.

Fundamentals And Technical Analysis

The Coca-Cola Company is currently trading at $49.62/share, down −0.8% for the day. The company is trading at approximately 82.5% of its 52-week high of $60.13/share. The company’s stock price is up 2.4% since the last earnings report and down −1.2% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 46.60 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:KO Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 23.20 and a forward P/E multiple of 27.42.

The Coca-Cola Company’s current share price also implies a price-to-book (P/B) multiple of 12.19. The following table summarizes some other key fundamental ratios:

Data as of October 20, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 26, 2020
Stock Price (Current) $49.62
P/E Ratio 23.2x
P/E Ratio (Fwd) 27.4x
PEG Ratio 0.8
Total Debt / Total Capital 19.4%
Levered Free Cash Flow $6.933 billion
EV / EBITDA 20.1x

Finbox

The Coca-Cola Company is a large-cap stock with a market capitalization of $213.1 billion and a total enterprise value of $247.4 billion. The company operates in the Consumer Staples sector and the Beverages industry.

The Coca-Cola Company, a beverage company, manufactures, markets, and sells various nonalcoholic beverages worldwide. The company provides sparkling soft drinks; water, enhanced water, and sports drinks; juice, dairy, and plant–based beverages; tea and coffee; and energy drinks. It also offers beverage concentrates and syrups, as well as fountain syrups to fountain retailers, such as restaurants and convenience stores. The company sells its products under the Coca-Cola, Diet Coke/Coca-Cola Light, Coca-Cola Zero Sugar, Fanta, Fresca, Schweppes, Sprite, Thums Up, Aquarius, Ciel, Dasani, glacéau smartwater, glacéau vitaminwater, Ice Dew, I LOHAS, Powerade, Topo Chico, AdeS, Del Valle, fairlife, innocent, Minute Maid, Minute Maid Pulpy, Simply, ZICO, Ayataka, Costa, dogadan, FUZE TEA, Georgia, Gold Peak, HONEST TEA, and Kochakaden brands. It operates through a network of company-owned or controlled bottling and distribution operators, as well as through independent bottling partners, distributors, wholesalers, and retailers. The company was founded in 1886 and is headquartered in Atlanta, Georgia.

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