Coca-Cola’s earnings and estimates outpace sales amid rising prices

“The Coca-Cola Company today announced results for the first quarter of 2023, demonstrating resilience in the market despite a still dynamic operating environment,” the company said in its earnings report.

Coca-Cola also confirmed its outlook for the full year. It expects comparable earnings to grow between 4% and 5% in 2023, with organic revenue growth between 7% and 8%.

Shares of Coca-Cola rose 0.6% Monday, to $64.46. The stock is up 1.3% this year.

“Despite better-than-expected first-quarter results, KO reiterated its guidance for 2023, which we believe is prudent given the uncertain macro environment,” Citi analyst Filippo Vallorni wrote in a research note Monday. Falorni has a buy rating on the stock with a price target of $71.

The Company believes that inflation will continue to affect its financial performance throughout the fiscal year. Commodity price inflation will affect the comparative cost of goods sold, or the direct costs of producing the goods sold. Coca-Cola has largely been able to offset higher production costs by increasing prices. Indeed, average selling prices increased 11% during the quarter.

Consumer staples stocks such as Coca-Cola were weathering the macroeconomic uncertainty relatively well as shoppers were willing to pay higher prices for their favorite brands. The question now is what the breaking point will be for consumers – and how many price increases they can afford. As macroeconomic conditions slow down, consumers are becoming more budget conscious.

Unit case volumes rose 3% in the first quarter, notching gains in Latin America and Asia Pacific. But case volumes in EMEA decreased by 3%, while case volumes in North America remained unchanged.

Truist Securities analyst Bill Chappell remains bullish on the stock, rating Coca-Cola stock a Buy with a $75 price target. He wrote in a research note on Monday that he sees “upside potential in the second half of 23 as the company should take advantage of lower costs, [foreign exchange]More productivity and possibly higher prices.”

Write to Angela Palumbo at [email protected]