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Should You Buy Coca-Cola Shares Ahead of Q2 Earnings?

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Earnings season has kicked into full swing, with a wide variety of companies unveiling quarterly results daily. The major banks started the season with better-than-expected results, helping drive positive sentiment.

And next week, we’ll hear from The Coca-Cola Co. (KO - Free Report) on Wednesday, July 26th, before the market’s open.

We’re all familiar with the consumer staples titan, whose strong brand equity, marketing, research, and innovation have helped it to garner a market share of more than 40% in the non-alcoholic beverage industry.

But how does it stack up heading into its quarterly release? We can use results from a peer who has already reported, PepsiCo (PEP - Free Report) , as a small gauge. Let’s take a closer look.

PepsiCo Q2

PepsiCo posted better-than-expected Q2 results thanks to strong consumer demand trends, exceeding the Zacks Consensus EPS estimate by more than 7%. Quarterly revenue totaled $22.3 billion, 3% above expectations and improving by a solid 10% year-over-year.

Undoubtedly worth highlighting, the better-than-expected results represented the company’s 6th consecutive double-beat.

Zacks Investment Research
Image Source: Zacks Investment Research

The company’s diversified portfolio remained a source of strength throughout the quarter; global beverages and convenience foods businesses saw 11% and 15% organic revenue growth, respectively. And to top it off, PEP’s core gross profit grew 13% on the back of a 130-bp expansion within its core gross margin.

CEO Ramon Laguarta said, “We are very pleased with our performance for the second quarter as our business momentum remains strong. As a result, we now expect our full-year organic revenue to increase 10 percent (previously 8 percent) and our core constant currency EPS to increase 12 percent (previously 9 percent).”

The full-year guidance upgrade is certainly a major positive, reflecting the favorable position that the company currently resides in.The results impressed the market, with PEP shares seeing a nice boost post-earnings. This is illustrated in the chart below.

Zacks Investment Research
Image Source: Zacks Investment Research

Now, let’s take a look at how estimates stack up for Coca-Cola

Coca-Cola Q2

Analysts have taken their expectations marginally higher over the last several months, with the $0.72 per share estimate up 1.4% and suggesting year-over-year growth of a modest 3%.

Zacks Investment Research
Image Source: Zacks Investment Research

In addition, our consensus revenue estimate presently stands at $11.7 billion, 3.6% higher than year-ago quarterly sales of $11.3 billion. It’s worth noting that the quarterly estimate has been revised a tick higher over the last several months, reflecting optimism.

Coca-Cola has consistently delivered better-than-expected results, exceeding the Zacks Consensus EPS estimate by an average of 4.2% across its last four quarters. Just in its most recent release, the beverage titan delivered an upbeat 4.6% bottom line surprise and reported sales modestly above expectations.

Zacks Investment Research
Image Source: Zacks Investment Research

Coca-Cola shares haven’t seen much action in 2023, up a slight 2%. Still, shares have recently reclaimed their 200-day moving average, reflecting favorable market momentum in the near term.

Bottom Line

With earnings season picking up serious momentum, investors will have plenty of quarterly results to sort through daily.

And next week, on Wednesday, July 26th, we’ll hear from consumer staples titan Coca-Cola (KO - Free Report) .

A peer, PepsiCo (PEP - Free Report) , has already unveiled its quarterly results, with the company posting better-than-expected numbers and raising its full-year guidance thanks to strong consumer demand.

Analysts have been primarily optimistic for KO’s quarter to be reported, with top and bottom line expectations creeping higher over the last several months.

Heading into the print, Coca-Cola is currently a Zacks Rank #3 (Hold) with an Earnings ESP Score of 2%.


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