The Coca-Cola Co (NYSE:KO) is scheduled to release its first-quarter earnings report before the trading bell rings Wednesday. What do you need to know and what should you expect in this earnings report? We take a look at what financial experts are combing through and what investors are biting their nails over.
The Coca-Cola Co Q1 Report: What to Expect
Current expectations suggest a weaker first quarter than previous years. It’s predicted that Coke’s adjusted earnings would be 44 or 45 cents a share in the first quarter. This would be down from 48 cents a share the same time a year ago.
In the first quarter, sales are forecast to hit $10.29 billion, down from $10.7 billion in 2015. Despite the hit in sales, the share price will likely be celebrated by investors. Year-to-date, shares are up more than eight percent at nearly $47.
Overall, analysts agree that Coke will beat various expectations. The reasons for this include Coka’s $3 billion cost-cutting initiative, an array of new marketing campaigns and boosts in foreign exchange. Analysts, however, do suggest investors to be worried about potential soda taxes and the firm’s long-term reinvestment risks.
Coca-Cola has had a stellar five years. If it wants to keep that momentum alive then the soda maker has to beat several expectations.
A Lot Going on at The Coca-Cola Co
Since the millennial demographic gradually became a dominant consumer, the general consensus was that so-called unhealthy products would be vanquished. Experts warned that all of the sodas and Big Macs of the world would vanish. Were they right? Not quite.
After a wave of bad press over its sugary drinks, Coca-Cola released a downsized drink. Sales of its 7.5-ounce mini-cans have been huge for Coke. Over the last three years, sales have grown by double digits, including 15 percent jump in the first half of 2015. Although consumers are paying more for less, it seems like it doesn’t bother them at all.
Minis are driving revenues for Coke. It makes sense: a standard 12-ounce can of Coke sells for an average of 31 cents, while a 7.5-ounce mini sells for 50 cents. It’s a dip in sales volume, but an increase in revenues.
This week, Coke unveiled its “One Brand” packaging. In an effort to grow its global marketing strategy, the company launched new graphics that utilize a specific visual identity. It will feature Coca-Cola Red as a unifying color throughout the trademark.
The new graphics are meant to identify a consumer’s beverage option and to help them make an informed decision. As part of the new packaging, here are the new colors: black is for Zero, green is for Life and silver is for Diet.
Here are the four drinks:
- Coca-Cola Original Taste (or Classic in select markets)
- Coca-Cola Light/Diet: Crisp Taste, No Calories
- Coca-Cola Zero: Zero Sugar
- Coca-Cola Life: Less Sugar, With Stevia Leaf Extract
Coke is making a splash in Australia’s energy drinks market. Coca-Cola Amatil is vying for an increased share of the $1.2 billion energy drinks market in the Land Down Under. It’s looking to dethrone Red Bull and V after it reached a deal to distribute Monster Energy drinks in Australia and New Zealand.
Barry O’Connell, Coca-Cola Amatil’s managing director of Australian Beverages, confirmed the latest partnership will help make the brand a market leader in this growing category.
“Our alliance with Monster will enable us to reinvigorate the category in Australia with one of the world’s most popular energy drinks,” he said. “We are confident we will grow the category and accelerate growth for both companies in these important markets.”
There you have it. This is what’s going on at Coke and what you can expect will play as factors to the first-quarter earnings report. Now it’s up to you to answer the question: is Coke still a good investment?