Why Coca-Cola Stock Is Lower Despite Its Earnings Beat

Cans of Coca-Cola and Zero Sugar Coca-Cola in ice — (Image credit: Tasos Katopodis/Getty Images for NYCWFF)

Coca-Cola (KO) stock is trading lower Wednesday even after the soda pop maker beat top- and bottom-line expectations for its third quarter.

In the three months ended September 27, Coca-Cola's net revenue decreased 0.8% year-over-year to $11.9 billion. However, organic revenue, which excludes certain items such as acquisitions and currency, increased 9%. Meanwhile, the company said earnings per share (EPS) were up 5% from the year-ago period to 77 cents.

The results came in ahead of analysts' expectations. Wall Street was anticipating revenue of $11.6 billion and earnings of 74 cents per share, according to Yahoo Finance.

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"We are encouraged by our year-to-date performance and our system's ability to manage near-term challenges while also remaining focused on long-term growth opportunities," said Coca-Cola CEO James Quincey in a statement.

As a result of its performance in the first nine months of the year, Coca-Cola said it now anticipates organic revenue growth of approximately 10% in fiscal 2024, which is the high-end of its prior range of 9% to 10%. It added that it continues to anticipate earnings-per-share growth in the range of 5% to 6%.

Is Coca-Cola stock a buy, sell or hold?

Coca-Cola is one of the better-performing Dow Jones stocks this year, up 20% on a total return basis (price change plus dividends). And Wall Street thinks the consumer staples stock has more room to run.

According to S&P Global Market Intelligence, the average analyst target price for KO stock is $74.80, representing implied upside of about 10% to current levels. Additionally, the consensus recommendation is a Buy.

Despite this vote of confidence from Wall Street and the fact that KO is one of Warren Buffett's favorite stocks, not everyone is in the bull camp.

Indeed, financial services firm CFRA Research maintained a Hold rating on Coca-Cola after earnings and lowered its price target on the stock to $70 from $72.

"With KO shares having rebounded over the past several months to a record high in September, we maintain a Hold on valuation and headwinds from both currency and volume growth," says CFRA Research analyst Garrett Nelson.

"We thought the fact KO didn't raise guidance was a modest disappointment following the better-than-expected Q3 results," Nelson adds, which could explain the stock's post-earnings slump.

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.