Here’s What To Expect From Coca-Cola’s Q4

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KO: The Coca-Cola Company logo
KO
The Coca-Cola Company

Coca-Cola (NYSE: KO) is scheduled to report its Q4 2022 results on Thursday, February 9. We expect KO stock to trade sideways, with revenue likely falling slightly below, but earnings above the consensus estimate, driven by pricing actions. However, the forex headwinds may weigh on the overall performance. Furthermore, our forecast indicates that KO stock has room for growth, as discussed below. Our interactive dashboard analysis of Coca-Cola Earnings Preview has additional details.

(1) Revenues expected to be below the consensus estimates

  • Trefis estimates Coca-Cola’s Q4 2022 revenues to be around $9.6 billion, reflecting a low single-digit y-o-y growth and below the $10.0 billion consensus estimate. 
  • Both at-home and away-from-home channels will likely drive this growth, primarily aided by better pricing.
  • Looking at Q3 2022, Coca-Cola’s sales of $11.1 billion reflected a 10% y-o-y growth, driven by a 4% rise in concentrate sales and a 12% rise in price/mix, 2% gains from the impact of acquisitions and divestitures, partly offset by an 8% fall due to currency fluctuations.
  • Our dashboard on Coca-Cola Revenues has details on the company’s segments.
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(2) EPS likely to be above the consensus estimates

  • Coca-Cola’s Q4 2022 adjusted earnings per share (EPS) is expected to be $0.47 per Trefis analysis, slightly above the consensus estimate of $0.45.
  • The company’s adjusted net income of $3.0 billion in Q3 2022 reflected a 7% rise from its $2.8 billion figure in the prior-year quarter, driven by sales growth, about a 1o0 bps rise in operating margin, partly offset by a slightly higher tax rate.
  • For the full-year 2023, we expect the adjusted EPS to be higher at $2.63 than the EPS of $2.32 in 2021 and an estimated $2.50 in 2022.

(3) KO stock looks like it has room for growth

  • We estimate Coca-Cola’s Valuation to be around $70 per share, about 16% above the current market price.
  • At its current levels, KO stock is trading at a 23x forward EPS estimate of $2.63, 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

While KO stock looks like it has more room for growth, it is helpful to see how Coca-Cola’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

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.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Feb 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 KO Return -2% -5% 45%
 S&P 500 Return 3% 9% 87%
 Trefis Multi-Strategy Portfolio 6% 18% 271%

[1] Month-to-date and year-to-date as of 2/3/2023
[2] Cumulative total returns since the end of 2016

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