The latest in the cola wars: Pepsi is lowering its outlook, while Coca-Cola is raising its 🥤😂
First, Pepsi’s Q3 👇
Revenue was $25.27 billion, up 5.6% and slightly better than expected; core EPS was $2.34, up just 2%.
Organic revenue grew 3.1%—its fastest pace in nearly two years—but that was mainly thanks to international markets (+8%). Snacks and beverages in North America are still trending down 😅
Margins also narrowed a little (16.9%), and the company cut its full-year EPS growth target to 2.5%–3.5%.
In a nutshell: steady, but not exactly exciting.
Now let’s put the two side by side for Q2 🥊
Pepsi: revenue +6.4%, organic revenue +2.4%, core EPS +4% (just +1% excluding currency effects), margins at 16.8%
Coca-Cola: revenue +7%, organic revenue +6%, volume +5%, EPS +11%, margins at 35.6% and still climbing
Coke mainly sells concentrate, which is an asset-light business, so its margins are more than twice Pepsi’s. And with the World Cup giving it a boost, Coke’s brand volume growth was the strongest in 17 years ⚽️
The share-price action also tells you a lot 📈📉
Coca-Cola: about 69.9 at the start of the year → about 88.0 now, up around 26% this year and not far from its 52-week high of 92.5. The stock jumped about 5% on the day of its Q2 earnings report.
Pepsi: about 143.5 at the start of the year → about 125.7 now, down around 12% this year and hovering near its 52-week low of 123.5. It bounced about 3.7% on the day of its Q3 earnings report, then gave some of that back the next day.
One is near a high, the other near a low: Coke is a case of the strong getting stronger; Pepsi is a turnaround story.
What clues did Coca-Cola leave us in Q2 about Q3?
• Full-year EPS growth guidance raised to 9%–10%, with organic revenue growth around +5%
• In Q3, currency is expected to add about 3% to EPS and 1% to revenue; asset sales are expected to reduce revenue by about 1%
• Q3 shipments are expected to grow a little slower than volume
• The second half faces a high comparison base, and Q4 has six fewer days
My back-of-the-envelope math 🧮
Last year’s Q3 revenue was $12.46 billion, and EPS was $0.82. Based on the clues above, I estimate:
Revenue of around $12.9–$13.1 billion and EPS of around $0.89–$0.91.
The market expects EPS of $0.88 and revenue of $12.9 billion. Coke has beaten expectations for eight consecutive quarters, so I wouldn’t be surprised if it edges past them again this time.
Two things to watch: Will sales hold up after the World Cup buzz fades? And will the company raise its full-year guidance again?
We’ll find out before the U.S. market opens on October 27. I’ll be back then to check how my predictions did 👀
(Personal musings and analysis; share prices are approximate intraday figures for October 9. These estimates are not company guidance and are for reference only—not investment advice.)
First, Pepsi’s Q3 👇
Revenue was $25.27 billion, up 5.6% and slightly better than expected; core EPS was $2.34, up just 2%.
Organic revenue grew 3.1%—its fastest pace in nearly two years—but that was mainly thanks to international markets (+8%). Snacks and beverages in North America are still trending down 😅
Margins also narrowed a little (16.9%), and the company cut its full-year EPS growth target to 2.5%–3.5%.
In a nutshell: steady, but not exactly exciting.
Now let’s put the two side by side for Q2 🥊
Pepsi: revenue +6.4%, organic revenue +2.4%, core EPS +4% (just +1% excluding currency effects), margins at 16.8%
Coca-Cola: revenue +7%, organic revenue +6%, volume +5%, EPS +11%, margins at 35.6% and still climbing
Coke mainly sells concentrate, which is an asset-light business, so its margins are more than twice Pepsi’s. And with the World Cup giving it a boost, Coke’s brand volume growth was the strongest in 17 years ⚽️
The share-price action also tells you a lot 📈📉
Coca-Cola: about 69.9 at the start of the year → about 88.0 now, up around 26% this year and not far from its 52-week high of 92.5. The stock jumped about 5% on the day of its Q2 earnings report.
Pepsi: about 143.5 at the start of the year → about 125.7 now, down around 12% this year and hovering near its 52-week low of 123.5. It bounced about 3.7% on the day of its Q3 earnings report, then gave some of that back the next day.
One is near a high, the other near a low: Coke is a case of the strong getting stronger; Pepsi is a turnaround story.
What clues did Coca-Cola leave us in Q2 about Q3?
• Full-year EPS growth guidance raised to 9%–10%, with organic revenue growth around +5%
• In Q3, currency is expected to add about 3% to EPS and 1% to revenue; asset sales are expected to reduce revenue by about 1%
• Q3 shipments are expected to grow a little slower than volume
• The second half faces a high comparison base, and Q4 has six fewer days
My back-of-the-envelope math 🧮
Last year’s Q3 revenue was $12.46 billion, and EPS was $0.82. Based on the clues above, I estimate:
Revenue of around $12.9–$13.1 billion and EPS of around $0.89–$0.91.
The market expects EPS of $0.88 and revenue of $12.9 billion. Coke has beaten expectations for eight consecutive quarters, so I wouldn’t be surprised if it edges past them again this time.
Two things to watch: Will sales hold up after the World Cup buzz fades? And will the company raise its full-year guidance again?
We’ll find out before the U.S. market opens on October 27. I’ll be back then to check how my predictions did 👀
(Personal musings and analysis; share prices are approximate intraday figures for October 9. These estimates are not company guidance and are for reference only—not investment advice.)