Cocacola
Dreamstime
Coca-Cola stock was rising after the beverage giant reported earnings that surpassed analysts’ expectations.
Coca-Cola (ticker: KO
) reported an adjusted quarterly profit of 45 cents a share, beating forecasts for 41 cents, on sales of $9.5 billion, topping expectations for $8.9 billion.
Annual earnings came in at $2.32 a share on $38.7 billion in revenue, surpassing expectations for profit of $2.29 a share on revenue of $38.1 billion.
Organic revenue rose 9% in the quarter and 16% for the full year. Yearly revenue growth was driven by a 9% increase in concentrate sales and a 6% rise in price/mix, the company said. Price/mix for the quarter grew 10%.
For the quarter, the operating margin was 22.1%, down from 27.3% in the prior year. That figure was 28.7% for the year, compared to 29.6% for the year. The compression was driven by an increase in marketing investments and top-line pressure from six fewer days in the quarter, the company said in a press release.
“In 2021, our system demonstrated resilience and flexibility by successfully navigating through another year of uncertainty,” said James Quincey, chairman and chief executive. “We focused on our key strategies and emerged stronger.”
The company expects to deliver organic revenue growth of 7% to 8% during the 2022 fiscal year, with adjusted earnings per share growing between 5% and 6%.
Coca-Cola warned that foreign exchange rates and the rising cost of commodities could impact performance over the next year, projecting a 3% to 4% currency headwind on earnings per share for the year and a 5% currency headwind for the quarter.
The company has benefited from the gradual global reopening from the coronavirus pandemic. Global unit case volumes improved each quarter, and full-year case volume surpassed 2019 pre-pandemic levels. The fourth quarter marked the first time in which away-from-home consumption was ahead of 2019, especially in markets where Covid-19 uncertainty was receding.
China, India, and Russia led the growth in emerging markets, while the U.S., Mexico and the U.K. led developed markets.
Wells Fargo analyst Chris Carey believes that momentum at Coca-Cola can continue, and reiterated his Overweight rating on the stock. The company’s top line is likely to “give confidence in over-delivery vs expectations, especially with significantly higher price/mix delivery in Q4 as pricing and mix tailwinds unfold,” he said.
CFRA also reiterated a Buy opinion on Coca-Cola, with analyst Garrett Nelson raising his price target to $70 from $68.
“We think KO’s strong results reflect its brand power and ability to thrive in an inflationary environment, as top line improvement was entirely driven by price and mix,” he wrote in a research note Thursday.
Coca-Cola stock was up about 0.9% to $61.56 in premarket trading on Wednesday. Shares of Coca-Cola have risen 3% this year through Wednesday’s close.
Competitor PepsiCo. ( PEP
), which also reported earnings Thursday, was up 1.1%. The beverage and snacks giant posted adjusted earnings of $1.53 a share on revenue of $25.3 billion, both higher than estimates.
Write to Sabrina Escobar at [email protected]
