Coca-Cola
The Coca-Cola Company (#Coca-Cola) is the world’s largest beverage manufacturer and distributor. It has interests in manufacturing, retailing and marketing of nonalcoholic beverage concentrates and syrups and operates in more than 200 countries and territories around the world. Headquartered in Atlanta, Georgia and traded on the NYSE, the $234.77 billion in market cap Company along with its bottling partners in different parts of the world employs over 700,000 people and has over 200 brands, some of which are worth billions of dollars. The multinational company is expected to report its earnings for the fiscal quarter ending September on Wednesday, October 27, 2021 before market open.
Zack’s current EPS estimate sits at $0.58, beating its year ago quarter by 5.45% whilst maintaining a positive earnings ESP (Expected Surprise Prediction) of 0.75% which shows upward revisions in recent earnings estimates by analysts (the idea is that more recent information could be more accurate and can be a better predictor). Considering the fact that the company has beat every quarter earnings estimates since the start of 2020, currently maintaining a $2.25 current year estimate (up from $1.95 in 2020 and the highest over the last 6 years), it can be argued that a potential beat may once again be on the cards. Zack’s Q3 revenue estimate is $9.95 billion, up from $8.65 billion (10.9% growth) in the year ago quarter whilst maintaining a $37.80 billion estimate for the full year, up around 14.9%, earning it a #3 Hold rating on Zacks’ rank.
Annual Earnings History and Projections
Although the resurgence of COVID-19 cases in the third wave that started in Q3 could have impacted Coca-Cola sales as a result of renewed restrictions, which was perhaps why there are lower earnings estimates when compared to Q2, 2021 which printed at $0.68, the outlook for the beverage giant is still very much positive. After releasing a solid Q2 report, the company improved its earning guidance from $2.09–$2.20 to $2.20–$2.24 for the year 2021 and said “Our business is rebounding faster than the overall economic recovery led by our accelerated transformation”. The Chairman and CEO, James Quincey, went further to say “We are executing against our growth plans and our system is aligned. We are better equipped than ever to win in this growing, vibrant industry and to accelerate value creation for our stakeholders.” The Coca-Cola Company recently declared a dividend of 42 cents per share payable on December 15, 2021 to the shareholders of the company. Inasmuch as there could be stock price reaction from either a beat or miss in the earnings and revenue report, we should also take into consideration the comments from the company’s executives to determine the sustainability of such moves.
Technicals
Since falling from $57.50 in mid-August, #Coca-Cola has maintained a downward trend for most of Q3 but still trades within an overall range since April, 2021 between $53.50 and $57.50 only briefly trading below it once between late September and early October. Although the stock now trades above the 20-day Moving Average, it is yet to recover from the death cross early in mid-September and still trades below the 50-day Moving Average. RSI could make a case for the bulls as it trades just above the midway point but considering that it has stayed glued to the halfway line almost all through the month, indecision is a more obvious call. MACD seems to be showing signs of life for #Coca-Cola at it approaches the zero line from negative territory but until the earnings report where a good beat or miss will give investors more to chew on, it might just remain in indecisive territory. $54.90 serves as the next overhead resistance if there is a beat in earnings after which $55.50 would be the next call. Alternatively, a miss could see the stock price head lower, revisiting the $53.50 support level and if cleared, $52.40 would be the next support level.
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