Coca-Cola Earnings Preview: What to Expect from Today's Report

Alright, fellow investors, it's that time of the quarter again! Coca-Cola (NYSE:KO) is set to release its fourth-quarter earnings on Tuesday before the market opens. Wall Street analysts are expecting a 6% rise in earnings per share to 52 cents, but revenue is projected to decline 2.5% year-over-year to $10.68 billion. So, what's in store for us today? Let's dive in!



First things first, let's talk about that revenue decline. The strong US dollar has been a bit of a party pooper for Coca-Cola's international sales, which make up about two-thirds of its total revenue. The US Dollar Index has climbed nearly 8% since September, making Coca-Cola's products more expensive abroad and reducing the value of foreign earnings when converted back into dollars. Ouch! The company has already warned investors of a 10% headwind to adjusted earnings per share for the fourth quarter due to currency pressures. Additionally, acquisitions, divestitures, and other structural changes are expected to create a further 3% to 4% drag on earnings. Double ouch!

But hey, it's not all doom and gloom. Coca-Cola has been working hard to diversify its product portfolio and expand into new categories, such as water, sports drinks, and coffee. Fairlife, the company's premium milk brand, has been a real game-changer, contributing 35% of the company's domestic sales growth in 2024. That's right, just 5% of Coca-Cola's US business accounted for nearly a third of its sales growth! Not too shabby, huh?



Now, let's talk about those earnings. Analysts are expecting Coca-Cola to report EPS of 52 cents, up 6% from the same quarter last year. However, it's important to note that this growth is largely driven by share buybacks, which reduce the number of outstanding shares, rather than organic growth. The company's operating margins are expected to decline due to currency headwinds and higher input costs. However, the company's refranchising of bottling operations has been a positive influence on its operating margins, so that's something to keep an eye on.

As for guidance, Coca-Cola has been pretty conservative lately. The company has been focusing on managing near-term challenges while also remaining focused on long-term growth opportunities. This means that any positive surprises could be a real boost for the stock.



So, what should you expect from today's earnings report? Well, it's likely that Coca-Cola's revenue will be down, but earnings will be up. The company's diversification efforts, particularly with Fairlife, will likely be a hot topic. And, of course, we'll be keeping an eye on any guidance the company provides. As always, it's important to remember that earnings reports are just one piece of the puzzle. Keep an eye on the company's long-term strategy and the broader market trends as well.

And there you have it, folks! Coca-Cola earnings preview: what to expect from today's report. Now, go forth and conquer the markets!