Coca-Cola (NYSE: KO) will report its Q2 2023 results on Wednesday, July 26. We expect the company’s revenues to come in at $11.7 billion, aligning with the consensus estimate. This would mark year-over-year growth of about 4%. Earnings will likely come in at about $0.72 on a per-share and adjusted basis, in line with the consensus estimate. See our interactive dashboard analysis on Coca-Cola Earnings Preview for more details on how the company’s revenues and earnings will likely trend for the quarter. So, what are some of the trends that are likely to drive Coca-Cola’s results?
The company will likely continue to benefit from pricing actions resulting in growth for both at-home and away-from-home channels, primarily in North America. Looking at Q1 2023, Coca-Cola’s revenues were up 5%, led by an 11% rise in price/mix and a 1% growth in concentrate sales, and this trend is expected to continue in the near term. North America and EMEA segments saw double-digit sales growth in Q1, while Latin America rose in high single-digits. The company’s adjusted operating margins were up 40 bps in Q1, partly due to the impact of the company’s refranchising of bottling operations. On a reported basis, the operating margin declined 180 bps due to currency headwinds. Our Coca-Cola Operating Income Comparison dashboard has more details. The earnings of $0.68 on a per share and adjusted basis were up 5% from $0.64 in the prior-year quarter.
Looking at Coca-Cola’s stock price, we believe that it is fully valued. We estimate Coca-Cola’s valuation to be $62 per share, largely in line with its current market price. Our forecast is based on about 24x P/E multiple for KO and expected earnings of $2.63 on a per-share and adjusted basis for the full-year 2023. The 24x figure aligns with the stocks’ last three-year average. The company has guided for adjusted EPS to be around $2.60 for the full-year 2023.
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 Coca-Cola stock looks appropriately priced, check out how Coca-Cola 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 portfolio that aims for long-term growth? Here’s a value portfolio that’s done much better than the market since 2016.
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