What to look for when Coca-Cola Company (KO) reports Q2 results

The Coca-Cola Company (NYSE: KO) is all set to unveil its second-quarter 2024 financial results next week. Over the years, it has constantly innovated its portfolio and expanded far beyond the flagship product. Currently, the company offers a wide range of products to serve customers of different tastes. Taking a cue from the widespread shift to healthier drinks, it also came up with sugar-free variants.  

Coca-Cola shares reached a new record high in the latest session, reflecting the positive investor sentiment ahead of the earnings. They have been on an upward spiral for about three months and stayed above the 52-week average during that period. In the past nine months, the stock gained about 22%. But the valuation is still good from an investment perspective. This dividend stock has long been a favorite among long-term investors.

Estimates

It is estimated that the soft drink giant generated $0.80 per share of earnings, excluding special items, in the June quarter. That is higher than the $0.78 per share the company earned in Q2 2023. Analysts are looking for revenues of $11.76 billion, which is broadly in line with the prior-year outcome.  

Coca-Cola is thriving on continued volume growth and higher prices. Organic revenue, a key metric for consumer companies, grew a better-than-expected 11% in the most recent quarter. The strength of the company’s global portfolio, with growing international market share, helps balance the impact of soft consumer spending in high-inflation markets like the US and UK. The company has increased its advertising and marketing spend for the year to attract customers.

Meanwhile, Coco-Cola executives have warned that Q2 earnings might include an approximate 8-9% currency headwind. They also expect second-quarter revenues to include around 6% currency headwind. The report is expected to be out on Tuesday, July 23, at 6:55 am ET.

From Coca-Cola’s Q1 2024 earnings call:

“Innovation is woven into the fabric of our culture, and we’re encouraged by our innovation pipeline as we look forward to the rest of 2024. Moving across the flywheel, we’re leaning into integrated execution to drive basket incidence and create incremental value for customers. We work closely with our bottling partners and went bigger with in-store displays to inspire transactions around key events like NCAA March Madness in the U.S., and we’ll do this again later this summer with the Olympic and Paralympic Games.”

Q1 Outcome

In the past seven years, Coca-Cola’s quarterly earnings have either beaten or matched the market’s estimates consistently. The trend continued in the first quarter when adjusted profit moved up 7% year-over-year to $0.72 per share. At $11.3 billion, Q1 revenue was up 3% year-over-year. The top line came in slightly above estimates. With 7% growth, the North America business segment continued to be the main revenue contributor. The operating margin came in at an impressive 18.9%.

Extending the upswing that started several months ago, Coca-Cola’s stock traded up 1% on Tuesday afternoon after opening the session higher.