Coca-Cola Q3 Earnings: Can the Soft Drink Giant Fizz Past Expectations?

Coca-Cola is set to release its third-quarter earnings before the U.S. market opens on Wednesday.

Analysts are anticipating a decline in revenue but a slight increase in earnings per share (EPS) compared to the same period last year.

Last week, rival PepsiCo revised its full-year organic sales growth forecast downward, partly due to pressure in international markets.

Coca-Cola (KO) will release its Q3 earnings before the market opens on Wednesday, and investors are closely watching to see how the company measures up against competitor PepsiCo (PEP).

Coca-Cola is expected to report revenue of $11.65 billion, down 2.5% year-over-year, with an earnings per share of 74 cents, compared to 71 cents in the prior-year quarter.

Key Metric: Product Mix

Investors will be paying attention to price and product mix shifts across Coca-Cola’s geographical segments.

In the previous quarter, unit case volume grew by 2% year-over-year, driven by a 2% increase in Coca-Cola’s trademark beverages and 6% growth in Coca-Cola Zero Sugar.

Sparkling soft drinks improved by 3% overall, and sports drinks rose by 3%. Conversely, water sales fell by 1% and coffee dropped by 4%.

Business Spotlight: Comparison with Pepsi

Last week, PepsiCo revised its full-year organic sales growth expectations downward when announcing earnings, with management stating that “the cumulative effects of inflationary pressures continue to impact budgets and spending patterns.”

UBS analysts noted in a report on Wednesday that similar concerns, particularly in international markets such as China, Mexico, and the Middle East, could also affect Coca-Cola’s results.

“Based on what we saw from Pepsi last week, we believe these concerns are somewhat justified, as certain international markets remain challenging or are becoming more difficult,” UBS stated.

According to UBS data, Wall Street is projecting 6.7% organic growth for Coca-Cola, with 4% growth in North America and 8.3% internationally.

Coca-Cola shares rose by 0.8% on Friday, climbing above $70. The stock has gained roughly 20% so far this year.

Currently, Coca-Cola's stock price is around $69.45, sitting near a support level. If earnings exceed expectations, the stock could likely continue to rally, potentially breaking its historic high of $73.53. However, if earnings disappoint, $67.4 could become the next support level.