Coca Cola Earnings Preview: Fourth Quarter 2009

Coca Cola [[KO]] is scheduled to report their fourth quarter 2009 results before the market opens on Tuesday, February 9th. Based on analysis from, Coca Cola is expected to report inline quarterly results that meet Wall Street’s consensus expectations.


Analyst Expectations

We are forecasting revenues of $7.25 billion and EPS of $.67. This would represent a 2% increase in revenues from last year’s $7.13 billion in the same period. The current analyst consensus estimates calls for revenues of $7.21 billion and EPS of $.67.


Earnings Analysis

Coca Cola is expected to report another solid quarter driven by improving consumer sentiment. Following four consecutive quarters of year/year sales declines, we anticipate a return to revenue growth in the fourth quarter. While unit volumes are expected to post another slight decline, Coca Cola has managed to improve their market positioning. According to Beverage Digest, Coca Cola gained market share from Pepsi [[PEP]] in the juice drink category in 2010.


We are expecting consumer spending to improve over the next few quarters and we believe that Coca Cola’s global reach should enable them to capitalize on this recovery. With a solid 3% dividend yield and double-digit earnings growth expected this year, we are looking for KO to deliver solid returns to investors in 2010


Stock Performance

In 2009, Coca Cola shares gained 26% as stock outperformed the 19% gain in the Dow Jones industrial average. Since the beginning of the year, Coke’s shares have slid nearly 5%.



Coca Cola is now trading at 16x consensus 2010 EPS estimates. This is a premium to the relative valuations of their peer group. Coca Cola remains one of the great defensive stocks to own given their solid growth prospects and their 47-year trck record of increasing dividends.


Recommendation: Buy with an $60 price target


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