A week ago, The Coca Cola Company (NYSE: KO) came out with a strong set of quarterly numbers that could potentially lead to a stock appreciation. The company exceeded expectations with revenue of US $ 9.0 billion, reaching 4.5% ahead of forecast. Statutory earnings per share (EPS) was $ 0.52, 4.4% ahead of estimate. Profits are an important time for investors because they can follow a company’s performance, look at what analysts are forecasting for next year, and see if there has been a change in sentiment towards the company. We have put together the most recent statutory forecasts to see if analysts have changed their earnings models as a result of these results.
Discover our latest analysis for Coca-Cola
After the latest results, the 19 analysts covering Coca-Cola are now forecasting revenues of US $ 36.8 billion in 2021. If achieved, that would reflect a solid 10% improvement in sales from the past 12 months. Earnings per share are expected to jump 26% to US $ 2.12. Yet prior to the latest results, analysts were forecasting revenues of US $ 36.8 billion and earnings per share (EPS) of US $ 2.12 in 2021. So it’s pretty clear that although analysts have updated their estimates, there has been no major change in company expectations as a result of the latest results.
There has been no change in revenue or profit estimates or in the price target of US $ 59.13, which suggests that the company has lived up to expectations in its recent result. The consensus price target is only an average of individual analysts’ targets, so it might be helpful to see the breadth of the range of underlying estimates. There are a few variations of perceptions on Coca-Cola, with the most bullish analyst valuing it at US $ 67.00 and the most bearish at US $ 53.00 per share. This is a very narrow range of estimates, implying either that Coca-Cola is an easy company to value, or – more likely – that analysts are relying heavily on some key assumptions.
One way to get more context on these forecasts is to look at how they stack up against both past performance and the performance of other companies in the same industry. For example, we noticed that Coca-Cola’s growth rate is expected to accelerate significantly, with revenues forecast to show growth of 14% by the end of 2021 on an annualized basis. This is well above its historic decline of 5.0% per year over the past five years. In contrast, our data suggests that other companies (with analyst coverage) in the industry are expected to see their revenues grow 5.6% per year. So it looks like Coca-Cola is set to grow faster than its competition, at least for a while.
The bottom line
The most obvious conclusion is that there has been no major change in the outlook for the company lately, with analysts keeping their earnings forecasts stable, in line with previous estimates. Fortunately, there were no major changes to the revenue forecast, with the business still expected to grow faster than the industry as a whole. The consensus price target has not really changed, suggesting that the intrinsic value of the company has not undergone any major changes with the latest estimates.
With this in mind, we still believe that the long-term trajectory of the company is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Coca-Cola through 2025, and you can view them for free on our platform here.
In addition, you should also educate yourself about the 3 warning signs we spotted with Coca-Cola.
This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.