What Does Wall Street Expect from Coca-Cola’s 1Q16 Revenue?
What Investors Can Expect from Coca-Cola's 1Q16 Results
Gearing up for 1Q16 results
Coca-Cola (KO) is slated to announce its 1Q16 results on April 20, 2016. Coca-Cola is the largest soda maker in the United States, with an extensive portfolio of nonalcoholic beverages, including over 20 brands generating more than $1 billion in retail sales.
In 2015, Coca-Cola’s performance was impacted by adverse currency fluctuations and weakness in soda volumes.
Sales trend
Coca-Cola’s revenue has fallen in 11 out of the past 12 quarters. In 4Q15, the company’s revenue fell by 8% as the favorable impact of higher unit case volume and pricing was offset by currency headwinds.
The company’s organic revenue, adjusted for the impact of acquisitions, divestitures, and structural changes, fell by 1% in 4Q15. The company attributed this fall to the impact of six fewer days in the quarter.
For 2015, Coca-Cola’s revenue fell by 3.7% to $44.3 billion due to unfavorable foreign currency changes. This marked the third consecutive year of falling revenue for the company.
Coca-Cola and rival PepsiCo (PEP) are present in over 200 countries. International operations contributed 54% and 44% to Coca-Cola’s and PepsiCo’s 2015 revenues, respectively. PepsiCo’s significant exposure to international revenue caused a 5.4% fall in its 2015 revenue.
The net sales of Dr Pepper Snapple (DPS) and Monster Beverage (MNST) rose by 2.6% and 10.5%, respectively, in 2015.
Analysts’ expectations
For 1Q16, analysts expect Coca-Cola’s revenue to come in at $10.3 billion. This estimate implies a 3.6% fall in 1Q16 revenue on a year-over-year basis. The fall reflects the expected impact of adverse currency fluctuations.
Based on the guidance it issued in February 2016, Coca-Cola expects currency fluctuations to be a five point headwind on its 1Q16 net revenue. The Vanguard Dividend Appreciation ETF (VIG) has 4.3% exposure to Coca-Cola.
We’ll look at the performance of the company’s still and sparkling beverages in the next part of this series.
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