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The Ratings Game: Coca-Cola’s third-quarter profit and revenue bodes well for beverage stocks, says analyst

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Coca-Cola reported better-than-expected profit and revenue before the opening bell on Tuesday, the latest set of positive numbers from the beverage industry.

The company’s stock rose 1.26% after the third-quarter earnings beat and raised outlook, while the S&P 500
SPX,
+1.39%

and the Dow Jones Industrial Average
DJIA,
+0.94%

rose 1.28% and 0.83%, respectively. Coca-Cola Co.’s
KO,
+2.32%

stock has slipped 1.55% year to date, compared with the S&P 500’s decline of 19.31% and the DJIA’s fall of 12.6%.

Raised prices helped the company offset cost inflation, and Coca-Cola said it is building on momentum from the first half of the year. “Our business is resilient amidst a dynamic operating and macroeconomic environment,” said Coca-Cola CEO James Quincey in a statement.

Coca-Cola now expects to deliver full-year organic revenue growth of 14% to 15% in 2022, up from its prior forecast of 12% to 13%. The Dow component also raised its 2022 adjusted earnings per share growth outlook to 6% to 7%, from its earlier forecast of 5% to 6%.

Now read: Coca-Cola stock jumps after profit and revenue beat expectations, as raised prices helped offset cost inflation

“Given the stronger than expected result for [Coca-Cola] across the board and raised guidance, despite increased [foreign-exchange] headwinds, we believe the result should increase investors’ confidence surrounding the momentum of the beverage category,” Truist Securities analyst Bill Chappell wrote in a note released on Tuesday. Truist maintained its $75 Coca-Cola price target and buy rating.

Coca-Cola’s third-quarter numbers continue the beverage giant’s run of strong results, even in the face of cost and currency headwinds.

Of 26 analysts surveyed by FactSet, 19 have an overweight or buy rating on Coca-Cola, six have a hold rating and one has an underweight rating.

Last week, Coca-Cola rival PepsiCo Inc.
PEP,
+0.36%

reported third-quarter revenue and profit that beat expectations and also raised its full-year expectations. PepsiCo’s stock rose 0.16% on Tuesday.

Also read: PepsiCo stock jumps, as earnings show ‘very healthy’ consumers are still willing to pay more for soda and chips

Keurig Dr Pepper Inc.
KDP,
+0.30%

reports its third-quarter results before market open on Thursday. Analysts surveyed by FactSet are looking for revenue of $3.633 billion and earnings of 45 cents a share on net income of $658 million.

Keurig Dr Pepper stock fluctuated on Tuesday and was down 0.07% by early afternoon. The stock has risen 4.21% in 2022 and 3.61% in the last three months.

Of 21 analysts surveyed by FactSet, 10 have an overweight or buy rating for Keurig Dr Pepper, 10 have a hold rating, and one has an underweight rating.

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