Coca-Cola Q1 To Benefit From Pricing Actions

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

Coca-Cola (NYSE: KO) will report its Q1 2023 results on Monday, April 24. We expect KO stock to trade sideways, with revenue and earnings meeting the consensus estimate. While the company should continue to benefit from pricing actions, forex headwinds may affect overall performance. Also, our forecast indicates that KO stock is appropriately priced, as discussed below. Our interactive dashboard analysis of Coca-Cola Earnings Preview has additional details.

(1) Revenues expected to be in line with the consensus estimates

  • Trefis estimates Coca-Cola’s Q1 2023 revenues to be around $10.8 billion, reflecting a low single-digit y-o-y growth and aligning with the consensus estimate. 
  • Both at-home and away-from-home channels will likely drive this growth, primarily driven by better price/mix.
  • Looking at Q4 2022, Coca-Cola’s sales of $10.1 billion reflected a 7% y-o-y growth, driven by a 2% rise in concentrate sales and a 12% rise in price/mix, partly offset by -8% currency translation.
  • Our dashboard on Coca-Cola Revenues has details on the company’s segments.
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(2) EPS likely to align with the consensus estimates

  • Coca-Cola’s Q1 2023 adjusted earnings per share (EPS) is expected to be $0.64 per Trefis analysis, in line with the consensus estimate.
  • The company’s adjusted net income of $1.9 billion in Q4 2022 reflected no change from its prior-year quarter figure, as sales growth was offset by about a 130 bps fall in net margin.
  • For the full-year 2023, we expect the adjusted EPS to be higher at $2.60 than the EPS of $2.48 in 2022.

(3) KO stock looks like it is appropriately priced

  • We estimate Coca-Cola’s Valuation to be around $67 per share, just 5% above the current market price.
  • At its current level of 64, KO stock is trading at 25x the forward EPS estimate of $2.60, compared to the last three-year average of 24x, implying that it is appropriately priced.

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 fully valued, 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 Apr 2023
MTD [1]
YTD [1]
Total [2]
 KO Return 3% 0% 54%
 S&P 500 Return 1% 8% 86%
 Trefis Multi-Strategy Portfolio 3% 11% 249%

[1] Month-to-date and year-to-date as of 4/20/2023
[2] Cumulative total returns since the end of 2016

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