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Coca Cola (KO) Earnings Preview

by | Oct 25, 2021

Coca Cola (KO) shares flagging ahead of earnings on 10/27 before the open and strong history closing higher in 9 of the last 11 reports. The average closing move is 2% and the max move has been 6.07%. The current implied move is 2%. The Street is looking for $0.58 on $9.75B in sales, a 12.8% Y/Y growth while next quarter is guided to 4.5% growth. The FY is at $2.26/$37.92B. The $234.6B company trades 22.5X earnings, 6.45X sales, and 18X cash with a 3% yield. KO is coming off a solid report in July and KO preparing to boost marketing spend into year-end as the recovery accelerates in many of their key markets. KO is well-hedged for inflation around costs while they continue to work with bottlers on supply chain pressures. They should continue to benefit from continued growth for Topo Chico as well which has been expanding into new markets. Analysts have an average target for shares of $61.50 and a Street High $65. Deutsche Bank lowering their PT to $59 on 10/15. The firm skews more cautious on revenue but slightly more bullish on overall earnings and believes more volatile on-premise and away-from-home trends following the delta variant uptick in July and shipment timing considerations are likely to weigh on concentrate volumes and channel mix. Truist raising their PT to $60 as the company remains part of the reopening trade, especially as COVID Delta variant and inflation fears create additional volatility in the market. Coca-Cola’s share gains in the quarter should also help further its leading position in the NARTD category, while its continued focus on long term profitability is expected to be rewarded.  Short interest is 0.80%. Hedge fund ownership fell 3.5%. On the chart, shares are flagging above the low-end of monthly value and a breakout move targets a run to POC at $56 and then the value high at $57. KO is in a large rising channel from the April/May 2020 lows that has a bigger target up near $60 on a run. Options flow has been bullish with buyers recently in the November $54.50 calls, June $55 calls, and January 2024 $47.50 calls. The March, May, and January 2023 options also with bullish put sales since mid-September.

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