The Coca-Cola Co (NYSE: KO) 3Q 2017 earnings are set for release on Wednesday before opening bell, and Wall Street is looking for 49 cents per share in earnings on $8.72 billion in sales. In the year-ago quarter, the beverage maker reported earnings of 49 cents per share on $10.63 billion in revenue.
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Coca-Cola 3Q 2017 earnings preview
Macquarie analyst Caroline Levy said in her preview note on Coca-Cola 3Q 2017 earnings that she’s looking for organic sales growth of 3.4% with a 1% gain in volumes. However, she estimates that revenue declined 17% year over year on a reported basis due to the sale of the company’s bottling operations.
She believes the company’s operating margin expanded by about 410 basis points to 27.5%, although that’s below the consensus at 28.4%. The expected margin expansion is due to the ongoing refranchising of the company’s bottling operations. Coca-Cola has set a deadline of the end of this year to complete the refranchising of its bottling operations in the U.S., so Wall Street will be listening for an update on that during the earnings call.
Levy added that the carbonated soft drink category has been weak, but she also believes Coca-Cola has been gaining share from PepsiCo based on the newest data from US IRI. The data shows a 1.7% gain for the 12 weeks ending Sept. 24, although carbonated soft drinks declined 0.6% across all soft drink manufacturers. PepsiCo showed a 5.4% gain in the category.
Levy has a Neutral rating and $47 price target on Coca-Cola stock.
What else to watch in Coca-Cola 3Q 2017 earnings
One thing that has weighed on soft drink sales was the recent weakness in convenience store sales, so analysts could be watching how this trend affects Coca-Cola as well. Coca-Cola launched its new Coke Zero Sugar during the third quarter. The soft drink maker also rolled out a broad marketing campaign to go along with Coke Zero Sugar, which replaces Coke Zero.
