It has been about a month since the last earnings report for Coca-Cola (KO). Shares have added about 5.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Coca-Cola due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Coca-Cola Q2 Earnings & Sales Beat, Raises Forecast

Coca-Cola reported second-quarter 2024 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate and improved year over year. The company’s results have benefited from its continued business momentum, backed by its effective all-weather strategy. Driven by the strong results, KO has raised its view for 2024.

Coca-Cola has reported comparable earnings per share (EPS) of 84 cents in the second quarter, up 7% from the year-ago period. Comparable EPS also beat the Zacks Consensus Estimate of 80 cents. Unfavorable currency translations hurt the comparable EPS by 10 percentage points. Comparable currency-neutral earnings per share rose 17% year over year.

Revenues of $12.4 billion advanced 3% year over year and surpassed the Zacks Consensus Estimate of $11.9 billion. Organic revenues rose 15% from the prior-year quarter. Coca-Cola’s top line benefited from strong revenue growth across most of its operating segments, aided by improved price/mix and concentrate sales. In the reported quarter, Coca-Cola gained a global value share in the total non-alcoholic ready-to-drink beverages.

In the reported quarter, concentrate sales were up 6% year over year, whereas the price/mix improved 9%. The price/mix benefited from pricing actions in the marketplace and a favorable mix. In the quarter, concentrate sales were four points higher than the unit case volume, mainly driven by the timing of concentrate shipments. Coca-Cola’s total unit case volume increased 2% year over year in the second quarter. The unit case volume for the developed markets was flat year over year. The volumes for the developing and emerging markets rose in the mid-single digits, driven by growth in India, Brazil and the Philippines.

Coming to the cluster-category performance, the unit case volume increased 3% year over year for sparkling soft drinks. The sparkling soft drinks category benefited from growth in Latin America and the Asia Pacific. The trademark Coca-Cola reported 2% growth in unit volumes, whereas Coca-Cola Zero Sugar advanced 6%, aided by growth in all geographic operating segments. Meanwhile, the sparkling flavors category rose 3% year over year, backed by growth in the Asia Pacific. Volumes for juice, value-added dairy and plant-based beverages were up 2% in the second quarter, aided by growth in North America and the Asia Pacific.

Unit volumes for the water, sports, coffee and tea category were flat year over year in the second quarter. Coca-Cola witnessed a 1% volume dip in the water category, driven by declines in the Asia Pacific and North America, partly offset by growth in Latin America and EMEA. Sports drinks improved 3%, driven by gains in Latin America, EMEA and the Asia Pacific. The coffee business declined 4% due to a soft Costa coffee performance in the U.K. The tea volume rose 1%, backed by growth in the Asia Pacific and EMEA.

In dollar terms, the operating income rose 10% year over year to $2.6 billion, including a 16-point impact of currency headwinds. Comparable operating income rose 6.8% year over year to $4 billion. Comparable currency-neutral operating income advanced 18% on strong organic revenue growth across all segments, offset by higher marketing investments.

The operating margin of 21.3% in the second quarter expanded 124 basis points (bps) from 20.1% in the prior-year quarter. The comparable operating margin expanded 119 bps to 32.8%. The comparable currency-neutral operating margin expanded 246 bps to 34.1%.

Segmental Details

Revenues rose 15% year over year for Latin America, 9% for North America, 1% for the Asia Pacific, and 2% each for EMEA and Global Ventures. However, revenues declined 16% for Bottling Investments. Organic revenues improved 25% year over year in Latin America, 23% in EMEA, 9% in North America, 5% in the Asia Pacific, 1% in Global Ventures and 13% in Bottling Investments.

Guidance

Management has raised its view for 2024. It anticipates organic revenue growth of 9-10% for 2024 compared with an 8-9% rise mentioned earlier. Comparable net revenues are expected to include a 5-6% currency headwind based on current rates and hedge positions. The guidance also includes a 4-5% negative impact of acquisitions, divestitures and structural changes. The company anticipates an underlying effective tax rate of 19% for 2024.

Comparable currency-neutral EPS for 2024 is expected to increase 13-15% year over year compared with the previously mentioned 11-13% growth. The company anticipates comparable EPS to rise 5-6% year over year for 2024 versus the prior mentioned 4-5% jump. Comparable EPS growth is expected to include headwinds of 8-9% from currency, and 1-2% from acquisitions, divestitures and structural changes. The company expects most currency headwinds to result from currency devaluation due to intense inflation.

Management envisions an adjusted free cash flow of $9.2 billion for 2024, including $11.4 billion in cash flow from operations. Capital expenditure is likely to be $2.2 billion.

For third-quarter 2024, comparable revenues are expected to include a 4% currency headwind, and a 4-5% negative impact of acquisitions, divestitures and structural changes. Comparable EPS is estimated to include an 8% currency headwind, and a 1-2% negative impact of acquisitions, divestitures and structural changes.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

At this time, Coca-Cola has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Coca-Cola has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Coca-Cola belongs to the Zacks Beverages - Soft drinks industry. Another stock from the same industry, PepsiCo (PEP), has gained 4.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.

PepsiCo reported revenues of $22.5 billion in the last reported quarter, representing a year-over-year change of +0.8%. EPS of $2.28 for the same period compares with $2.09 a year ago.

For the current quarter, PepsiCo is expected to post earnings of $2.31 per share, indicating a change of +2.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.5% over the last 30 days.

PepsiCo has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.

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