Coca-Cola’s Q2 Earnings Outperform, Full-Year Guidance Revised Upward

Key takeaways

• Coca-Cola’s Q2 earnings surpassed expectations on earnings per share and revenue
• CEO James Quincey warned of ingredient prices going up, with costs being passed on to consumers
• Coca-Cola shares climbed 1.29% at the positive news

Coca-Cola had a good day on the stock market as it revealed its earnings and revenue had topped expectations while also issuing new, higher full-year guidance. Wall Street liked the confidence, with Coke’s stock gaining this week, but the CEO was keen to manage expectations. Let’s get into the details.

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What were Coca-Cola’s earnings like?

Coca-Cola impressed analysts this week with its second-quarter earnings beat, reporting earnings of 78 cents a share compared to the 72 cents expected. Revenue hit $11.97 billion for the quarter, surpassing the anticipated $11.75 billion figure, fueled by higher prices.

The soft drinks giant now expects to record adjusted per-share earnings growth of 5–6%, up from the 4–5% it predicted earlier in the year. It also expects organic revenue to increase by 8–9%, which is a climb from the previous 7–8% range the company forecasted.

Coca-Cola CEO James Quincey commented, “On the positive side, many supply chain pressures eased, concern surrounding the bank sector diminished and energy prices continue to pull back from record highs”. Still, he was also quick to mention some ingredient prices, like sugar and corn syrup, are putting pressure on profit margins.

Wall Street’s reaction

Pleased with the better-than-expected results and the guidance bump, Coca-Cola shares got a 1.29% boost on Wednesday. Even though the company is wary of ingredient price increases, the cost passed onto consumers was enough to satisfy investors that the company wouldn’t see a huge profit dip.

Coca-Cola’s share price has been flat in 2023, only up a marginal 0.16%. In comparison, Pepsi’s stock has gained much more, climbing 6.79% in the same time period. Both companies trail behind the excellent S&P 500 returns, currently at 19.4%, thanks to Big Tech bolstering the stock market.

The bottom line

Despite the CEO’s caveats, Coca-Cola has enjoyed a similar earnings beat to Pepsi and confirmed that the two soft drinks conglomerates are performing well despite a pullback in consumer spending. With U.S. inflation woes gradually receding, the picture is looking brighter — as reflected in the updated earnings guidance.

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