Coca-Cola (NYSE: KO) is scheduled to report its Q3 2022 results on Tuesday, October 25. We expect Coca-Cola to report revenue and earnings above the consensus estimates. Coca-Cola should benefit from pricing actions, but the forex headwinds may weigh on the overall performance. We expect the company to navigate well in Q3 and its stock to trend higher in the near term. Furthermore, our forecast indicates that KO stock has ample room for growth, as discussed below. Our interactive dashboard analysis of Coca-Cola Earnings Preview has additional details.
(1) Revenues expected to be above the consensus estimates
- Trefis estimates Coca-Cola’s Q3 2022 revenues to be around $10.7 billion, reflecting a 7% y-o-y growth and slightly above the $10.5 billion consensus estimate.
- Both at-home and away-from-home channels will likely drive this growth.
- PepsiCo recently reported its Q3 results with pricing growth in the high teens while its volume declined in low single-digits. A similar trend with strong pricing growth will likely drive Coca-Cola’s Q3 sales growth.
- Looking at Q2 2022, Coca-Cola’s sales of $11.3 billion reflected a 12% y-o-y growth, driven by a 12% rise in concentrate sales and a 4% rise in price/mix, 2% gains from the impact of acquisitions and divestitures, partly offset by a 6% fall due to currency fluctuations.
- Our dashboard on Coca-Cola Revenues has more details on the company’s segments.
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(2) EPS likely to be above the consensus estimates
- Coca-Cola’s Q3 2022 adjusted earnings per share (EPS) is expected to be $0.66 per Trefis analysis, slightly above the consensus estimate of $0.64.
- The company’s adjusted net income of $3.1 billion in Q2 2022 reflected a 4% rise from its $2.9 billion figure in the prior-year quarter, driven by sales growth, partly offset by 190 bps net margin contraction.
- For the full-year 2022, we expect the adjusted EPS to be higher at $2.50 than the EPS of $2.32 in 2021.
(3) KO stock looks like it has room for growth
- We estimate Coca-Cola’s Valuation to be around $70 per share, about 24% above the current market price.
- At its current levels, KO stock is trading at 22x forward EPS estimate of $2.50, compared to the last three-year average of 25x, implying that it has more room for growth.
- Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year
Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for Coca-Cola vs. Footlocker.
|S&P 500 Return||3%||-22%||65%|
|Trefis Multi-Strategy Portfolio||0%||-26%||193%|
 Month-to-date and year-to-date as of 10/20/2022
 Cumulative total returns since the end of 2016