Coca-Cola's (KO) Q2 Results are 'Another Absolute Blockbuster' - Analyst

Shares of The Coca-Cola Company (NYSE: KO) are up about 1% after the soft-drinks maker delivered strong Q2 results and hiked its full-year forecast. Bernstein called the report “another absolute blockbuster.”

KO reported an EPS of $0.70 to top the estimate of $0.67. Adjusted revenue was reported at $11.3 billion to easily top the $10.56 billion expected. Coca-Cola saw its organic revenue soar +16% to smash the analyst consensus of +8.19%

Following the strong Q2 results, KO hiked its organic revenue growth guidance for the full year to +12% to +13%, up from the prior outlook that was calling for +7% to +8%. Analysts were expecting growth of 10.3%. The company also reiterated its EPS guidance of rising 5-6%.

“Our results this quarter reflect the agility of our business, the strength of our streamlined portfolio of brands, and the actions we’ve taken to execute for growth in the face of challenges in the operating and macroeconomic environment,” said James Quincey, Chairman and CEO of The Coca-Cola Company.

KO also said it expects to suffer a 1% to 2% impact on net revenues and operating income on a full-year basis from the conflict in Ukraine and the decision to suspend its business in Russia. It also sees a $0.03 impact on comparable EPS.

Bernstein analyst Callum Elliott described the Q2 results as “another absolute blockbuster of a quarter.”

“Over the past couple of weeks, KO has faced fears over FX headwinds, and a supposedly "high-bar" after strong a strong PEP Q2 raised expectations. Much like Armand "Mondo" Duplantis, who continues to smash pole vault world records, Coke has flown well clear of this bar today. This is another absolute blockbuster of a quarter, with +16% organic revenue growth despite a 4%pt headwind from timing of shipments, making Pepsi's outstanding Q2 numbers look somewhat pedestrian,” Elliott told clients in a note.

The analyst continues to see KO stock as “somewhat of a safe-haven in these stormy times, and we think the stock should do well, relatively, today.”

Goldman Sachs analyst Bonnie Herzog also reflected positively, although in a less enthusiastic manner compared to his Bernstein colleague.

“Investor expectations for KO heading into results today were high, and KO's Q2 print likely exceeded expectations on the topline, but given margin pressures, the bottom line results were likely softer than expected (~$0.04 EPS beat). All in, we expect investors may have a mixed reaction to KO's results today as topline expectations for 2H need to come up but will be offset by increasing cost pressures as well as FX,” Herzog wrote in a client note.

By Senad Karaahmetovic

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