Technical Analysis

Coca Cola Earnings Announcement

• February 10, 2021

Coca Cola Earnings Announcement

February 10^th 2021

Unsurprisingly, The Coca Cola company has felt the negative effects of the pandemic, especially as approximately 50% of the company’s business comes from away-from-home sales. Confinement measures saw a significant reduction especially in fountain soft drink consumption. Sales are also down in both the Dasani and Powerade brands. As a result, the company has planned a 50% cut in representative brands, in order to invest further into the higher performance brands. One consequence is a cut of 2,200 jobs globally. In the shorter-term, Coca Cola may see lower performance than usual as the Food and Beverage industry has taken longer to recover from the pandemic than initially estimated. Despite this, the company’s management remains strong and has ambitious plans to position the company as a digital leader in response to changing consumer behaviour.

Investor Notes:

• Earnings are estimated at $0.42 per share, down from $0.44 per share in the previous year; representing approximately a 5% fall in profit.

• Coca Cola had an average 10% positive earnings surprise for 2020.

• Revenue for the quarter is estimated at $8.67 billion for Q4 of 2020 compared with $9.09 billion for the same quarter of 2019.

• Coca cola underperformed the S&P 500 by over 30% year-to-date.

• Share price has dropped 12% since the beginning of the pandemic.

Technicals

• The stock has moved off the lower bound of an ascending triangle which is typically a bullish continuation pattern.

• Price action has broken above the 200-day moving average (MA) with the 50-day MA in sight- another longer-term bullish signal.

• Oscillators highlight bullish momentum with MACD undergoing a bullish reversal and RSI testing the default line; a break will signify the stock has entered a ‘BUY’ channel.