The Coca-Cola Company (KO) is set to report FQ4 2013 earnings before the market opens on Tuesday, February 18th. The Coca-Cola company is an American multinational beverage company best known for its flagship Coke brand. Recently shares of Green Mountain Coffee Roasters (GMCR) took off after a deal was announced where KO will be taking a 10% stake in the company and releasing Coke products to GMCR’s at home single cup beverage system, Keurig. Long time rival Pepsico (PEP) recently admitted it was considering entering the home carbonation market, but is yet to make a commitment. This quarter Wall Street is expecting Coke to report increased profit compared to FQ4 last year, but slightly reduced revenue. Here’s how investors expect Coke to report Tuesday.
The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.
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The current Wall Street consensus expectation is for KO to report 46c EPS and $11.297B revenue while the current Estimize.com consensus from 22 Buy Side and Independent contributing analysts is 47c EPS and $11.318B revenue. This quarter the buy-side as represented by the Estimize.com community is expecting KO to beat Wall Street’s expectations on both EPS and revenue.
Throughout the previous 6 quarters the consensus from Estimize.com has been more accurate than Wall Street in forecasting KO’s EPS and revenue 4 and 3 times respectively. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market’s actual expectations. It has been confirmed by an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.
The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing an average differential compared to previous quarters.
The distribution of estimates published by analysts on the Estimize.com platform range from 45c to 49c EPS and $11.166B to $11.465B in revenues. This quarter we’re seeing a moderate distribution of estimates for KO.
The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution of estimates signaling less agreement in the market, which could mean greater volatility post earnings.
The Wall Street EPS consensus both started and ended the quarter at 46c while the Estimize forecast remained flat at 47c. Over the same period of time Wall Street lowered its revenue expectation from $11.352B to $11.297B and the Estimize consensus also fell from $11.375B to $11.318B. Timeliness is correlated with accuracy and falling analyst expectations going into a report are often a bearish indicator.
The analyst with the highest estimate confidence rating this quarter is j_holliman who projects 46c EPS and $11.347B in revenue. In the Winter 2014 season j_holliman is rated as the 21st best analyst and is ranked 7th overall among over 3,850 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case j_holliman is expecting Coca-Cola to come up short of the Estimize EPS consensus but beat the forecast on sales.
This quarter contributing analysts on the Estimize.com platform are expecting The Coca-Cola Company to beat Wall Street’s expectations on both the top and bottom line. KO stock struggled in January as US equities sold off across the board, but a strong earnings report Tuesday could help to get things moving back in the right direction.
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