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The Coca-Cola Company (KO - Free Report) is expected to register top-line growth when it reports third-quarter 2022 numbers on Oct 25, before the opening bell. The Zacks Consensus Estimate for the company’s third-quarter revenues is pegged at $10.6 billion, suggesting 5.6% growth from the prior-year quarter’s reported figure.

For third-quarter earnings, the consensus mark is pegged at 64 cents, suggesting a decline of 1.5% from the year-ago quarter’s reported figure. The consensus mark has been unchanged in the past 30 days.

We expect the company’s third-quarter total revenues to increase 5.7% year over year to $10,557.8 million and the bottom line to decline 2% to 64 cents per share.

In the last reported quarter, the leading soft-drink behemoth delivered an earnings surprise of 4.5%. Its bottom line beat the Zacks Consensus Estimate by 9.9%, on average, over the trailing four quarters.

CocaCola Company The Price and EPS Surprise

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Key Points to Note

Coca-Cola’s performances in recent quarters have been benefiting from strategic transformation and ongoing recovery around the world. The company’s volumes in the third quarter are expected to have benefited from the elasticity in the marketplace despite the ongoing global challenges. Coca-Cola’s third-quarter top line is likely to have gained from strong revenue growth across its operating segments, aided by an improved price/mix and an increase in concentrate sales. Sales gains from underlying share gains in both at-home and away-from-home channels are likely to have aided the third-quarter performance.

Continued volume gains in the trademark Coca-Cola; sparkling flavors; the nutrition, juice, dairy and plant-based beverages; and hydration, sports, coffee and tea categories are expected to get reflected in the company’s third-quarter results.

Coca-Cola’s third-quarter results are likely to reflect gains from innovations and accelerating digital investments. The company has been witnessing a splurge in e-commerce, with the growth rate of the channel doubling in many countries. KO has been accelerating investments to build strong digital capabilities. The company has been consistently strengthening consumer connections and piloting various digital-enabled initiatives through fulfillment methods to capture the online demand, which are likely to have boosted third-quarter sales.

However, Coca-Cola has been witnessing pressures from higher supply-chain costs, including rising commodity input costs and transportation expenses. The pressures from input cost inflation and other costs are likely to have hurt the company’s performance in the third quarter.

Coca-Cola has been investing in its markets and brands to support sales growth, with higher spending on consumer-facing activities. This has led to higher marketing investments in the past few quarters. Higher marketing spending, and an increase in short-term incentives and stock-based compensation are expected to have led to increased selling, general and administrative expenses in the third quarter.

On the last reported quarter’s earnings call, the company expected adverse currency rates to hurt the top and bottom lines in the third quarter. It expects a currency headwind of 7-8% on revenues and 9-10% on comparable earnings per share for the third quarter.

Zacks Model

Our proven model does not conclusively predict an earnings beat for Coca-Cola this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Coca-Cola has a Zacks Rank #4 and an Earnings ESP of -0.35%.

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