Coca-Cola Raises Full-Year Outlook for Third Straight Quarter

By Nathan Brooks

Coca-Cola just raised its full-year profit outlook for the third consecutive quarter, and Wall Street missed the numbers on every headline line.

The company now expects comparable earnings per share to grow at least 11% for the full year, up from its prior forecast of 9% to 10% growth. It also nudged its organic revenue guidance higher, to at least 5% growth from roughly 5% previously. Shares rose about 1% in premarket trading.

The third-quarter numbers themselves were the story of the morning. Here's what Coke reported against what analysts surveyed by LSEG were expecting:

• Earnings per share: 91 cents adjusted vs. 88 cents expected
• Revenue: $13.4 billion vs. $12.92 billion expected

Net income attributable to shareholders came in at $4.01 billion, or 93 cents per share, up from $3.7 billion, or 86 cents per share, a year earlier. Strip out transaction gains and other items, and you get the adjusted 91 cents. Net sales rose 7%, and organic revenue — which removes acquisitions, divestitures and currency swings — also climbed 7%.

Where the growth is actually coming from

Unit case volume rose 5% globally, and nearly all of that momentum came from outside North America. Coke's home market posted flat volume.

That flat number shouldn't surprise anyone tracking the company's commentary. In recent quarters, Coke executives have said North American shoppers are under pressure, stretched thin by inflation and economic uncertainty. The company has also said consumers are still buying its drinks, though — from premium brands like Fairlife down to its namesake soda.

So the picture is one of a consumer who's picky but not gone. Coke is keeping growth alive by leaning on price, mix and international demand rather than volume at home.

How each division performed

The category breakdown tells you where the demand sits right now:

• Sparkling soft drinks: volume up 5%, lifted by growth in Coke, Coke Zero Sugar and Diet Coke.
• Water, sports, coffee and tea: volume up 5%, driven by higher demand for water including the premium Smartwater brand. Tea and coffee demand was flat; sports drinks declined.
• Juice, value-added dairy and plant-based beverages: flat volume, despite growth in brands like Fairlife and Minute Maid.

Read that list again and a pattern emerges. The zero-sugar soda portfolio and premium water are doing the heavy lifting. Coffee, tea and sports drinks are lagging or shrinking.

What does this change for investors?

The practical question is whether a third straight guidance raise holds. On the evidence of this quarter, the answer leans yes: Coke beat on both the top and bottom lines, grew organic revenue 7% on 5% volume, and still found room to lift its full-year EPS floor by more than a full percentage point — a raise worth roughly one to two cents on every dollar of prior expected profit.

The watch item is North America. A flat home-market volume is manageable while international demand runs hot, but executives have been candid that inflation and economic uncertainty are pressing on US shoppers. If that pressure spreads overseas, the guidance math gets harder. For now, Coke has given investors a bigger cushion to absorb it.