What to Expect When Coke Reports

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Coca-Cola Co. (NYSE: KO) is scheduled to release its fourth-quarter financial results before the markets open on Friday. The consensus estimates from Thomson Reuters call for $0.39 in earnings per share (EPS) on $7.36 billion in revenue. In the same period of last year, the company said it had EPS of $0.37 and $9.38 billion in revenue.

This company has long been an American staple, with its iconic drink at the forefront. There have been multiple iterations of the soda, some more popular than others, but all have been generally received well. Recently, the soda dispensing giant made a huge announcement that it would be launching a full brand restage for Diet Coke.

Diet Coke has more or less held the same design and packaging, but after 35 years Coca-Cola is turning the brand on its head. The company is now marketing a new sleek look and modern design, as well as launching four new flavors: Diet Coke Ginger Lime, Diet Coke Feisty Cherry, Diet Coke Twisted Mango and Diet Coke Zesty Blood Orange.

Coke was one of the subpar Dow Jones industrial average stocks in 2017, and this year doesn’t look that much better. The trailing price-to-earnings (P/E) ratio is about 44, but Coca-Cola is valued at roughly 23 times expected 2018 earnings. And Wall Street is expecting an annualized dividend hike to just over $5 per share later in 2018.

Coca-Cola’s trailing P/E ratio ranks third highest on the Dow, while its forward P/E ratio ranks at number seven. This makes a solid case for the stock being overvalued, but what are analysts calling for?

Prior to the release of the earnings report, a few analysts weighed in on Coke:

  • Credit Suisse has a Buy rating.
  • Susquehanna has a Hold rating with a $45 price target.
  • Evercore ISI has an Outperform rating with a $55 price target.
  • Goldman Sachs has a Sell rating and a $49 price target.
  • Jefferies has a Neutral rating and a $50 price target.
  • RBC has a Buy rating with a $56 target price.

Excluding Thursday’s move, Coke has underperformed the broad markets, with its stock down about 4% year to date. Over the past 52 weeks, the stock is actually up closer to 9%.

Shares of Coke were last seen up about 1% at $44.63 on Thursday, with a consensus analyst price target of $49.87 and a 52-week trading range of $40.50 to $48.62.