Coke Posts Q4 Beat on a Rise in Demand for Namesake Brand

Coke Posts Q4 Beat on a Rise in Demand for Namesake Brand
January 31, 2020


Coca-Cola Co. (NYSE: KO) posted a 16% increase in fiscal 2019 fourth-quarter earnings, led by robust sales growth of concentrate and price/product mix growth. Organic revenues also increased by 7% on a y-o-y basis. The company also issued FY 2020 earnings almost in line with analysts’ estimates. Following impressive results, the stock gained 3.25% or $1.85 to close at $58.86. The stock has appreciated more than 20% in the past year.

The Atlanta-headquartered enterprise posted Q4 revenues of $9.07 billion, an increase of 16% from $7.81 billion in the similar period last year. Wall Street analysts had anticipated revenues of $8.89 billion for the fourth quarter. Organic revenues increased by 7% for the quarter ended in December 2019.

During the quarter, revenue growth was led by concentrate sales growth of 2% and price/product mix growth of 5%.

During the quarter, products such as Coke Plus Coffee and Coke Zero Sugar boosted sales. As soda intake has declined in the US, the company developed healthier options for the namesake soda brand. As part of the initiative, the company introduced Coke Energy in the US in early January.

There was one additional calendar day in the quarter, providing roughly a 1point increase to overall revenue.

For 4Q 2019, Coca-Cola posted a net income of $2.04 billion, or $0.47 a share, compared with $870 million, or $0.20 per share, in 4Q18.

In the previous year quarter, the company took other-than-temporary impairment charges of $334 million associated with Middle-East based equity method investees.

Comparable net income for Q4 2019 was $1.91 billion, or $0.44 per share, an increase from $1.88 billion, or $0.44 per share in the comparable quarter last year. The reported earnings were in accordance with analysts’ estimates.

Operating income increased 19% in the recent quarter, which included charges affecting comparability and a profit from takeovers, partially negated by currency headwinds.

Unit case volume increased 3% for the fourth quarter, driven by reasonable growth in the developing and emerging markets, in addition to impressive performance in developed markets.

In Europe, the Middle East and Africa, volumes increased by 4%, mainly due to growth in North Africa, Nigeria, central and eastern Europe, and Turkey. Likewise, volumes rose by 3% in Latin America, primarily due to acquisitions made by the company. Even though sales declined in China, the Asia Pacific zone posted a 2% increase in unit case volume.

For FY 2020, the company forecasts comparable earnings per share of about $2.25, compared with $2.11 in FY 2019. Analysts anticipate the company to post full-year 2020 earnings of $2.26 per share.

For the fiscal year 2020, Coca-Cola anticipates posting roughly 5% growth in organic revenues and about an 8% increase in comparable currency neutral operating income.

For 1Q 2020, the company anticipates comparable operating income to include a 5% currency headwind based on the prevailing exchange rates, along with the effect of hedged positions.

Comparable net revenues for Q1 2020 are anticipated to include a 0% to 1% tailwind from takeovers, divestments, and other structural items. Furthermore, a 2% currency headwind based on the prevailing rates, including hedged positions, is anticipated.

In March 2020, the company intends to launch a new flavored sparkling water line AHA. The upbeat results are anticipated to keep the stock bullish in the short-term.

The historical price chart indicates that the stock of Coca-Cola is receiving strong support from the 50-day moving average. Additionally, the stochastic oscillator is in the bullish zone. Therefore, we are anticipating the stock to remain bullish in the short-term.

Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.


Andrew Wright

Prior to founding in 2014, Andrew worked as a proprietary trader, then as a market maker. As a market maker, he traded options in over 100 stocks, he then began trading currency pairs in 2013. Andrew still actively trades both, and prides himself on educating and informing traders on the benefits of both Binary Options and Forex.

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