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Coca-Cola Q1 Earnings Preview: Everything You Need to Know
Stock Analysis & Ideas

Coca-Cola Q1 Earnings Preview: Everything You Need to Know

Coca-Cola (KO) is the world’s largest nonalcoholic beverage company with a market capitalization of $287 billion. It will reveal its financial results for the first quarter of 2022 on April 25.

The company’s business environment appears to be improving, but before we discuss the upcoming Q1 quarterly results, it’s worth noting that Coca-Cola reported a mixed fourth quarter in 2021. Due to higher costs, both margins and profits declined from the year-ago quarter.

To be more specific, net revenues climbed 9% to $9.46 billion in the fourth quarter. Profits per share, meanwhile, fell 44.3% year-over-year to $0.45. Due to increased marketing investments, adjusted operating margins fell to 22.1% from 27.3% in the year-ago quarter.

Let’s take a look at how the business is projected to do in the upcoming quarter.

Q1 Expectations

Coca-Cola is expected to report adjusted Q1 earnings of $0.58 per share, according to analysts. This indicates a 5.5% increase year-over-year.

Looking at the graph, we can see that over the past eight quarters, the company has regularly achieved higher-than-expected earnings.

There are, however, some headwinds to consider.

Coca-Cola said last month that it has halted operations in Russia. As a result, it’s likely that this will have an effect on Coca-Cola’s international sales to some extent. Further, the overall rise in costs amid elevated inflation levels might have impacted margins and profitability.

Wall Street’s Take

Despite the global uncertainty, JPMorgan analyst Andrea Teixeira is optimistic about Coca-Cola’s demand environment.

The analyst has lowered her forecasts for the majority of companies in the drinks and personal care market due to the current Russia/Ukraine war and its influence on commodity pricing, transportation, and currencies.

Despite her concerns, Teixeira expects Coca-Cola product demand to stay consistent, noting that consumers still prefer brands to private labels.

Therefore, Teixeira maintained her Buy recommendation on the stock and raised the price target to $68 from $65 per share.

Also, on TipRanks, Coca-Cola stock commands a Strong Buy consensus rating based on 10 Buys and four Holds. As for price targets, the average KO price target of $67.71 implies almost 2.3% upside potential from current levels.

Apart from analysts, investors also remain upbeat about the stock. Per the TipRanks Stock Investors tool, 7.3% of investors holding portfolios on TipRanks have accumulated KO stock in the last 30 days.

Bottom Line

Coca-Cola stock has increased in value by 25% in the last year and by around 13% so far this year. While the Russia-Ukraine war and inflationary pressures may have a short-term operational impact on the beverage company, its worldwide scale of operations, well-established portfolio of brands, and broader asset base could make it a strong investment option.

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