While Coke just hit a home run on earnings and sales, Wall Street’s acting like it’s coming down from a sugar high. Despite crushing expectations, the stock pulled a quick 2% faceplant in premarket trading (now only down -0.40% on the day). Translation: Wall Street Logic 101. 

(Source: Giphy) 

In short, Coke reported adjusted earnings of 77 cents per share, beating the streetside whisper of 75 cents (thanks, FactSet). Meanwhile, net sales hit a bubbly $11.9 billion, sliding in just above the $11.61 billion analysts had on their vision boards. So far, so fizzy, right? But here’s where the bubbles start to pop—unit case volume (translation: how many cans and bottles they actually moved) dipped by 1%, while prices shot up 10%.

(Source: AP) 

And because no earnings report is complete without some corporate poetry, CEO James Quincey stepped in with this masterpiece: “Our business continues to demonstrate resilience in the face of a dynamic external environment.” Which, basically means Coke is doing great, despite a world that’s in the sh*tter. And he’s not wrong—Coke’s pricing game has been tight, but even they’re feeling the burn from inflation, global economic hiccups, and a geopolitical landscape that looks like a game of Risk gone terribly wrong.

(Source: Food Navigator) 

Now with that said, sure, Coke’s ringing up more dollars per can, but here’s the thing: people aren’t buying as many. Unit case volumes took a hit globally, with China and the Middle East leading the charge into “yeah, maybe not today” territory, thanks to a sluggish economic recovery and, well, all the geopolitical headaches around the world.

But, but, but… in North America? It’s a different story. You see, Coke has been introducing slim 12-ounce cans to charm the budget-conscious crowd. And according to Dannie Hewson over at AJ Bell: :“Coca-Cola has shown some pretty fancy footwork to persuade drinkers to keep shelling out premium prices for its products.”.

(Source: Giphy) 

Meaning, as it turns out, when people are tightening their belts (both literally and figuratively), they prefer to sip their cola out of a skinny can. And guess what? It’s working—North America’s revenue jumped 12% in the quarter. Not bad.

Now, here’s the bad news (brace yourself, Grandpa Buffett): Coke’s looking at some serious headwinds for Q4 and beyond. Currency fluctuations (read: Argentina) and structural changes are expected to knock down earnings per share growth by around 10% next quarter. And just for kicks, throw in a 3-4% headwind from acquisitions and divestitures. Because why not?

(Source: Market Watch) 

However, Coke’s still optimistic, predicting a 5-6% EPS growth—so, not terrible, but definitely a little turbulence in the forecast. By 2025, however, they’re already bracing for a mid-single-digit gut punch from currency issues that had investors cringing after the statement. 

(Source: Street Insider) 

What’s more, is that it's not just Coke that’s preparing for some rough tailwinds ahead. PepsiCo. Isn’t necessarily having the time of their lives either. For instance, Pepsi’s Q3 results were more “flat soda” than “pop,” with disappointing revenue and a trimmed growth forecast. Yet, while Pepsi’s clinging to a 0.28% gain this year—barely, Coca-Cola’s shares are up about 18%, so yeah, they’re still winning the soda wars. 

(Source: Yahoo Finance) 

So, given all this, what’s the takeaway? Well, Coca-Cola is still flexing in the earnings and revenue department, but the waters ahead are a bit muddy. With global economic headwinds, currency drama, and slowing demand in key markets, Coke might be in for a bit of a fiasco if they aren’t careful in how they navigate it.

(Source: Giphy) 

But don’t start pouring one out for them just yet. According to UBS analyst Peter Grom, sentiment on the stock still leans positive, with confidence that Coke’s earnings outlook is “more than achievable.” In plain English: Wall Street isn’t necessarily panicking. Yet.

For now, though, even though Coca-Cola’s stock may be in for a bit of a fizz-out - we all know that brings music to Warren Buffet's ears to “Buy More baby”. Now obviously do what you will with this information and of course, act accordingly. But in the meantime, keep an eye on Coke to see if it presents a bigger “BTFD” opportunity and as always - stay safe and stay frosty friends! Until next time… 

P.S. At 9:35am EST yesterday morning, our screeners were flashing major SQUEEZE signs on one little known stock priced at $1.43 - whereas, in less than 5 minutes from notifying our premium members, this stock annihilated shorts, hitting a peak of 193.47% in less than ONE hour! Don’t miss the next massive leg up on this multi-day runner, click here now for the details…

Stocks.News holds positions in Coke and Pepsi as mentioned in the article.