After Pepsi, Now It’s Coca-Cola’s Turn

#Pepsi reported Q4 2022 earnings last week with results that surprised and topped market estimates, driven by higher prices for its snacks and beverages. But the company saw volumes fall 2% across its worldwide food business as rising prices hurt consumer demand.

#Pepsi reported organic revenue growth of 14% as full year revenue rises to $86 billion. This reflects growth across all geographies, mainly driven by higher sales prices. Ignoring currency effects, basic operating profit rose 10% to $11.5 billion as revenue growth and productivity savings offset higher operating costs. Underlying operating margins were broadly flat at 13.9%, despite a double-digit increase in advertising and marketing spending in Q4.

Free cash flow fell 18%, down to $5.9 billion. Net debt increased by $0.6 billion to $34 billion. Looking to 2023, the Company expects organic revenue growth of 6% regardless of exchange rate, and earnings per share (EPS) is expected to grow by 10%. Pepsi will pay a quarterly dividend of $1.15 per share, and announced plans to buy back about $1 billion worth of stock.

#Pepsi’s share price rallied more than 1% at the close last week. The stock price managed to overcome the 172.30 resistance and 200 day EMA by recording a temporary high at 176.56. The RSI validates a short-term change of direction in a dynamic bullish tunnel. Meanwhile the AO histogram is approaching its midline and needs a move to the upside to confirm a stronger buy zone. Meanwhile, Pepsi’s price is in the median line of the regression channel. Movement above 176.56 may target higher prices, but consolidation may also last for some time at the median line, before resuming its true direction. On the downside, the resistance at 172.30 which is now support could be a temporary barrier besides the 200 day EMA.

#Pepsi has done its job, now it’s  #Coca-Cola turn, which is expected to report earnings on Valentine’s Day, 14 February 2023, before the market opens. The report will be for the fiscal quarter ending December 2022. The market may be wondering if a similar scenario could occur for #Coca-Cola and whether the time has come to buy the beverage company’s stock.

#Coca-Cola. D1

The price of #Coca-Cola recorded a sharp decline in Jan 2023 of more than 3%, after a tough consolidation in Dec 2022. Although at the end of January it had strengthened, the decline continued in Feb 2023 until it reached a 3-month low at 58.89. Technically, the decline from the triple top in December is still dominant, as the price is still moving below the 200 day EMA. RSI is below the contraction area and AO is still in the sell zone, although a divergence is starting to form. A better earnings report could help the stock to test 61.57 resistance, while a disappointing report could sink the price below 58.89 support to test 58.00 and the support at 61.8% FR.

#Coca-Cola’s Q4 earnings are projected at $0.45 per share, which will be on par with Q4 2021 according to Zacks. Sales for the quarter are expected to be $10.01 billion, up 6% from the previous year’s quarter. This will complete Coca-Cola’s Fiscal 2022 with earnings up 7% to $2.48 per share. On the top line, sales will be up 11% for FY22 to $42.86 billion compared to $38.66 billion in 2021. After completing the 2022 fiscal year, Coca-Cola’s FY23 revenue is expected to rise 3% to $2.55 per share with revised forecasts earnings slightly higher during the last quarter. Sales are projected to rise 3% to $44.22 billion. Even more impressive, Fiscal 2023 will represent 38% growth over the last five years with 2018 sales of $31.85 billion.  Source : Zack

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Ady Phangestu

Market Analyst – HF Educational Office – Indonesia

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