KO Q2 Preview: Can Coca-Cola regain its fizz amid sales headwinds?

The Coca-Cola Company (NYSE: KO) has been able to navigate through recent uncertainties in the market, such as cautious consumer spending amid high inflation and geopolitical issues. Investors are closely watching the company’s upcoming earnings report for insights into evolving consumer behavior, particularly amid shifting demand patterns.

The Atlanta-based soft drink behemoth is expected to unveil its second-quarter numbers on Tuesday, July 22, at 6:55 am ET. Anticipating the recent softness in demand to extend into the June quarter, analysts estimate adjusted earnings of $0.84 per share, which is unchanged from the prior-year quarter. The consensus revenue estimate is $12.55 billion, which represents a 2% growth from Q2 2024.

Stock

Coca-Cola’s stock had an upbeat start to 2025 and has gained nearly 12% so far. After retreating from its April peak, the shares have largely traded sideways. Over the years, the company has consistently raised its dividend, boosting the stock’s appeal as a long-term investment, and currently presents a bigger-than-average yield of 2.8%. Given the consumer staples firm’s brand power and resilient performance, KO appears to be a compelling investment.

In the first three months of fiscal 2025, Coca-Cola’s net revenues declined 2% year-over-year to $11.1 billion, and slightly missed Wall Street’s forecasts. Organic revenue increased 6% YoY during the three months. Earnings per share, on a comparable basis, edged up 1% from last year to $0.73. The bottom line exceeded expectations, continuing the long-term trend. On a reported basis, net income attributable to shareowners rose 5% from last year to $3.33 billion or $0.77 per share in Q1.

“We continue to benefit from three primary factors. Firstly, we operate in a resilient industry with predictable growth. Second, while barriers to entry in our industry are low, barriers to scale in our industry are high. Lastly, we have significant headroom to develop our industry and gain share. And we believe we’re primed to capture these opportunities. Our portfolio power, as demonstrated by our 30 billion-dollar brands and pervasive, yet local, distribution are key differentiators. Our system continues to prioritize agility, consumer-centricity, and close partnership across our ecosystem to drive long-term growth,” Coca-Cola’s CEO James Quincey said in the Q1 earnings call.

Expectation

For the second quarter, the management expects revenue to include a 3% currency headwind, on an adjusted basis. Net income, excluding one-off items, is expected to include a currency headwind of approximately 5-6% in the June quarter. For the full fiscal year, it expects organic revenue to grow between 5% and 6%, and comparable earnings per share between 2% and 3%.

Coca-Cola’s average stock price for the last 12 months is $68.21. On Monday, the shares traded lower, extending their recent weakness.