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Upbeat Coca-Cola Earnings Boosts These ETFs

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The Coca-Cola Company KO has delivered second-quarter 2021 results, wherein earnings and sales beat the Zacks Consensus Estimate and improved year over year. Comparable earnings of 68 cents per share beat the Zacks Consensus Estimate of 57 cents and improved 61% from the year-ago period. Favorable currency translations aided earnings by 5%. Comparable currency-neutral earnings per share rose 55%.

Revenues of $10.129 billion surpassed the Zacks Consensus Estimate of $9.490 billion and improved 42% year over year. Organic revenues rose 37% from the prior-year quarter. The company’s top line benefited from improved price/mix and an increase in concentrate sales. Revenues gained from the ongoing recovery in markets where the pandemic-led disruptions are subsiding. The results also reflected benefits from cycling of revenue declines witnessed in the prior-year quarter.

Though the coronavirus-induced uncertainties still linger, the company raised its organic revenue and comparable earnings per share (EPS) growth guidance for 2021. It now estimates organic revenue growth of 12-14% for 2021 compared with high-single-digit growth mentioned earlier. It now estimates comparable EPS growth of 13-15% year over year versus a growth rate of high-single to low-double digits stated earlier. The company delivered comparable EPS of $1.95 in 2020.

Comparable net revenues are anticipated to be aided by a 1-2% currency tailwind, based on current rates and hedge positions. The company expects an underlying effective tax rate of 19.1% for 2021. Comparable EPS is expected to include currency tailwinds of 2-3% compared with the previously mentioned 3-4% currency tailwinds.

Coca-Cola’s shares gained 1.3% in the key trading session, owing to the better-than-expected second-quarter 2021 results and an upbeat view as well as expectations of currency tailwinds.

Against this mixed backdrop, investors may be interested in knowing about the Coke and PepsiCo-heavy ETFs along with their stocks. This is because an ETF approach always minimizes company-specific risks.

ETFs in Focus

Coca-Cola has an 8% to 11% exposure, respectively, to iShares Evolved U.S. Consumer Staples ETF IECS, Consumer Staples Select Sector SPDR Fund XLP, Fidelity MSCI Consumer Staples Index ETF FSTA and Vanguard Consumer Staples ETF VDC each.

Investors should also note that Consumer Staples ETFs performed pretty well at the start of the coronavirus-led selloffs. In the past one-month period too, shares of Coca-Cola gained decently. KO was up about 4% in the past one-month frame while IECS, XLP and FSTA added in the range of 1.8% to 2.2%. With the lockdown scenario easing globally (though not fully), beverage businesses should gear up ahead.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
CocaCola Company The (KO) : Free Stock Analysis Report
Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports
Vanguard Consumer Staples ETF (VDC): ETF Research Reports
Fidelity MSCI Consumer Staples Index ETF (FSTA): ETF Research Reports
iShares Evolved U.S. Consumer Staples ETF (IECS): ETF Research Reports
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