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COCA-COLA EARNINGS BEAT, REVENUE MISSES Q2 ESTIMATES -

21-Jul
19:57 IST

Coca-Cola Co reported a 28% drop in adjusted quarterly revenue on Tuesday as sales of its sodas were battered by the closure of restaurants, theaters, and sporting venues due to lockdowns to contain the spread of the novel coronavirus.

Coca-Cola shares are down 16% from the beginning of the year , still down 23.30% from its 52-week high of $60.13 set on February 21. They are under-performing the S&P 500, which is up 0.65% from the start of the year.

The Diet Coke, Fanta and Sprite maker generates about half of its revenues by selling its soft drinks and concentrates to restaurants and theater operators, such as McDonald’s Corp and AMC Entertainment Holdings Inc, but most of them had to close some or all of their operations under government-mandated curbs to fight the health crisis. 

Unit volume, a key measure that indicates demand, declined 16%, with Coca-Cola falling 7% and sparkling soft drinks tumbling 12%. Net income attributable to the beverage maker’s shareholders fell to $1.78 billion, or 41 cents per share, from $2.61 billion or 61 cents per share, a year earlier. 

Rival PepsiCo Inc also reported a fall in beverage sales, but a boost in at-home consumption of snacks helped it beat quarterly revenue estimates.  Excluding onetime items, Coca-Cola earned 42 cents per share, beating analysts’ average estimate of 40 cents. 

Coca-Cola’s report follows earnings beat by PepsiCo on July 13, who reported EPS of $1.32 on revenue of $15.95B, compared to forecasts EPS of $1.25 on revenue of $15.37B.

Coke reported fiscal second-quarter net income of $1.78 billion, or 41 cents per share, down from $2.61 billion, or 61 cents per share, a year earlier. Excluding items, the beverage giant earned 42 cents per share, topping the 40 cents per share expected by analysts. Net sales dropped 28% to $7.2 billion, meeting expectations.

On the technical front, the RSI is at 52.69% and suggests that the market can move in an upward direction. The current price is trading below 5days and 20days Moving Averages. The stochastic is forming a downside crossover.

Overall Bias is Positive and Short-term trades can be initiated with below mentioned Stop Loss and Profit targets.

Trade Suggestion—SHORT SELL AT $46.06 Take Profit at $43.50 Stop Loss at $47.80

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