What to Expect From These 5 Soft Drinks Stocks' Q4 Earnings?
Soft drinks beverage bellwethers like The
Coca-Cola Company KO and PepsiCo, Inc. PEP, along with a few other
players are lined up to report earnings this week. Notably, these
companies fall under the broader Consumer Staples sector that
houses daily products, including a broad range of categories from
agriculture operations to food and beverage companies.
Soft drinks are non-alcoholic beverages like sparkling soft drinks,
enhanced water, sports and energy drinks, and plant-based
beverages. Notably, the U.S. soft drinks industry has been battling
industry-wide sluggishness in the carbonated soft-drinks category
(CSD) on rising consumer health awareness. In addition, the zero or
low-calorie alternatives are causing health hazards due to the use
of artificial sweeteners. Slowdown of CSD sales remains a major
concern for soft drink makers and might result in lower sales and
margin declines.
Consequently, the Zacks Beverages - Soft drinks industry has
declined 6.7% against the S&P 500 Index’s 1.9% growth in a
year’s time. Currently, the industry is placed in the bottom 34%,
displaying a Zacks Industry Rank of 171 out of more than 250
industries.
Nevertheless, product innovation including introduction of healthy
non-carbonated drinks holds the key to success for these industry
players. Apparently, major companies in the space are resorting to
strategic buyouts to enrich their portfolio with fast-growing
sparkling water and sports drinks. It is also imperative to mention
that some of the industry players are enticed by the
cannabis-infused drinks, which can be one of the best alternatives
to the sugary sodas.
Now, let’s peep into these companies’ current affairs to know how
they are placed and what lies in store for their upcoming earnings
releases. Prior to that, a brief glance at the fourth-quarter 2018
earnings scenario, shows that the bottom line for the Consumer
Staples space is likely to rise 2.6% year over year, per the latest
Earnings Preview. Further, the top line for the sector is estimated
to inch up 0.1%, while margins are projected to expand 0.3%.
Further, as of Feb 8, roughly 66.7% of the S&P 500 companies in
this space have released the quarterly numbers. Out of these, 70%
delivered earnings beat, while 55% trumped sales estimates. On a
combined basis, 40% delivered both earnings and sales beat.
So, let’s see what awaits the following soft drinks stocks that are
queued up for fourth-quarter 2018 earnings this week.
Coca-Cola, the non-alcoholic beverage giant, is
benefiting from its robust brand identity, ongoing productivity
efforts and strategic initiatives. Its strategy of introducing new
products, besides focusing on lifting and shifting successful
brands globally is an added positive. Further, the company has
surpassed earnings estimates in the last six quarters, with five
straight sales beats. However, Coca-Cola undertook price increases
across its system, effective from the third quarter, with a view to
address the pressure from higher import and freight costs.
Meanwhile, currency headwinds are likely to hurt fourth-quarter
revenues by 4-5% and comparable operating income by 10-11%. (Read
more: Can Coca-Cola Keep Earnings Beat Trend Alive in Q4?)
Coca-Cola Company (The) Price and EPS Surprise
Coca-Cola Company (The) Price and EPS Surprise | Coca-Cola Company (The) Quote
Nevertheless, the Zacks Consensus Estimate for
fourth-quarter earnings is pegged at 43 cents, mirroring a 10.3%
improvement year over year. For revenues, the same is pinned at
$7.06 billion, down nearly 6% from the year-ago period.
According to the Zacks model, Coca-Cola is likely to beat estimates
this quarter. This is because our research shows that when a Zacks
Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) stock is combined with a
positive Earnings ESP the chance of beating earnings estimates is
high. You can uncover the best stocks to buy or sell before they’re
reported with our Earnings ESP Filter.
Coca-Cola’s Earnings ESP of +0.88% and a Zacks Rank #3 make us
confident about earnings beat in the upcoming release. You can see
the complete list of today’s Zacks #1 Rank stocks
here.
Next in the list is PepsiCo, a leading global food
and beverage company. It has outpaced earnings estimates in the
last 11 quarters, with a sales beat in five of the trailing seven
quarters. PepsiCo’s results are benefiting from strong performances
in its international divisions, propelled by higher revenue growth
in developing and emerging markets. Strong net revenues and
operating profit growth at Frito-Lay North America along with
sequential revenue gains in the North America Beverages segment has
also been aiding its performance. Moreover, the company’s
fundamental strength is evident from its solid brand portfolio,
product innovation and strong snacks business. (Read more: Can
PepsiCo Retain Positive Earnings Trend in Q4?)
Pepsico, Inc. Price and EPS Surprise
Pepsico, Inc. Price and EPS Surprise | Pepsico, Inc. Quote
The Zacks Consensus Estimate for fourth-quarter
earnings is pegged at $1.49, mirroring 13.7% year-over-year growth.
Further, the consensus mark for quarterly revenues stands at $19.5
billion, reflecting 0.1% decline from the prior-year quarter.
Nonetheless, PepsiCo is expected to beat earnings estimates
according to the Zacks model. This is because it has an Earnings
ESP of +0.20% and a Zacks Rank #3.
Coca-Cola European Partners plc CCEP, the maker of
non-alcoholic ready-to-drink beverages, has surpassed earnings
estimates in the trailing four quarters, the average being 3.3%.
However, the Zacks model does not conclusively show that the
company is likely to beat earnings estimates in the quarter under
review. It has Earnings ESP of 0.00% and a Zacks Rank #2.
Nevertheless, the Zacks Consensus Estimate for fourth-quarter
earnings stands at 62 cents, up 6.9% from the year-ago quarter,
while the same for revenues is pinned at $3.2 billion representing
a 2.7% growth.
Coca-Cola European Partners PLC Price and EPS Surprise
Coca-Cola European Partners PLC Price and EPS Surprise | Coca-Cola European Partners PLC Quote
Next is New Age Beverages Corporation NBEV, which delivered a positive earnings surprise of 11.1% in the last reported quarter. The Zacks model shows that the company is unlikely to beat earnings estimates this quarter as it has an Earnings ESP of 0.00% and a Zacks Rank of 2. Further, the Zacks Consensus Estimate for the to-be-reported quarter is pegged at a loss of 4 cents, while the same for revenues stands at $14.1 million.
New Age Beverages Corporation Price and EPS Surprise
New Age Beverages Corporation Price and EPS Surprise | New Age Beverages Corporation Quote
Finally, Barfresh Food Group,
Inc. BRFH, which is the producer of frozen, ready-to-blend
beverages. The company has witnessed a negative earnings surprise
of 100% in the third quarter. According to the Zacks model, the
company is unlikely to beat earnings estimates this quarter. This
is because it has an Earnings ESP of 0.00% and a Zacks Rank #3.
Further, the Zacks Consensus Estimate for the quarter stands at
break-even earnings. For revenues, the same is pegged at $5.3
million.
Barfresh Food Group Inc. Price and EPS Surprise
Barfresh Food Group Inc. Price and EPS Surprise | Barfresh Food Group Inc. Quote
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