Did Analysts Set the Bar Too Low for Coca-Cola Earnings

The company maintained its guidance for the 2015 full year, but also noted that it is considering that structural items will be a slight headwind to revenue growth, in addition to the currency situation. There are consensus estimates of $1.98 in EPS on $45.21 billion in revenue.

Cash from operations was $1.6 billion, up 48%, primarily due to efficient management of working capital and the impact of six additional days. This was partially offset by an unfavorable impact from foreign currency exchange rates. At the same time, net share repurchases totaled $386 million for the first quarter.

Coke gained global value share in nonalcoholic ready-to-drink beverages in the quarter. The company continued to strengthen and diversify its brand portfolio across key markets and categories as it gained global value share in sparkling and still beverages, juice and juice drinks, ready-to-drink tea and packaged water.

ALSO READ: Why Analysts Say Hasbro Is a Buy, While Mattel Is a Sell

Global sparkling beverage volume grew 1%, with solid performance across most key brands, including 1% growth in Coca-Cola, 5% growth in Coke Zero, 4% growth in Sprite and 3% growth in Fanta. Growth in these brands was partially offset by a 6% decline in Diet Coke.

In terms of global still beverages, volume grew 1%, reflecting growth in ready-to-drink tea, value-added dairy and packaged water. Volume growth in these categories was partially offset by a decline in juice and juice drinks attributable to price increases taken to cover higher input costs and continued industry softness in certain markets.

Muhtar Kent, chairman and CEO of Coke, said:

Though we are still in the early stages, we see some initial positive indicators that we have the right strategies in place to accelerate growth. However, we continue to view 2015 as a transition year as the benefits from the announced initiatives will take time to fully materialize amidst an uncertain and volatile macroeconomic environment. We remain committed to leveraging our superior brand portfolio together with our unparalleled global distribution system to continue creating long-term shareowner value.

Note that the company had cash and cash equivalents of $8.2 billion at the end of the first quarter.

A couple of analysts made calls just a week ahead of earnings:

• Nomura had a Buy rating with a price target of $53.
• Susquehanna initiated coverage of Coke with a $33 price target.

Shares closed Tuesday barely up 0.3% at $40.78. Following the earnings report, shares were up another 2.4% at $41.77 in premarket trading Wednesday. The stock has a consensus analyst price target of $44.41 and a 52-week trading range of $39.06 to $45.00.

ALSO READ: How Much Do Companies Really Have to Worry About Bird Flu?