Defensive Stock… Bracing For Coca-Cola Earnings (KO, PEP)

247wallst — Wed, 11 Feb 2009 21:53:45 +0000

Thursday morning we will get earnings from The Coca-Cola Company (NYSE: KO), and this will likely be the big set-up play for Friday’s Pepsico, Inc. (NYSE: PEP) earnings. We have prepared a detailed preview for Coca-Cola’s earnings.
Coca-Cola is expected to earn $0.61 EPS and $7.52 billion in revenue, according to First Call. For the coming quarter estimates are for $0.66 EPS and $7.32 billion in revenue; and for fiscal-2009 the consensus estimates are $3.19 EPS and $33.07 billion in revenue.

Options traders appear to be prepared to a move of more than $1.50 in either direction.

Coca-Cola’s shares have fallen since Friday. The stock is now trading within spitting distance of its lows of last October and November. For whatever it is worth, the 5-year lows are between $38.00 and $39.00.

This is supposed to be one of the go-to defensive stocks. Yet, most analysts have been backing off on their ratings. The average target is around $52.00, 25% higher than today. Long-term estimates have only come down marginally over the last 3 months. That is odd considering that multi-nationals have been claiming the dollar’s strength is eating into profits from overseas operations.

The latest data shows Coca-Cola trading at an expected 3.1-times 2008 revenue and 3-times expected 2009 revenue. Coca-Cola also is valued at 13.9-times 2008 expected earnings and 13.6-times 2009 expected earnings. Pepsi is valued at 14.6-times 2008 expected earnings and 13.9-times 2009 expected earnings.

These two are very similar but Pepsi has the snack food business that changes the mix. Coca-Cola will likely influence what is expected from Pepsi on Friday.

Jon C. Ogg
February 11, 2009

Posted in Defensive Stocks, Earnings, Food Tagged: Coca-Cola, COKE, Coke earnings, Defensive Stocks, KO, PEP, Pepsico

24/7 Wall St. » Coke earnings

Defensive Stock… Bracing For Coca-Cola Earnings (KO, PEP)