KO Pre-earnings Analysis

KO Pre-earnings Analysis:

Chart done on daily timeframe. Consumer defensive stocks surprisingly did not perform well in 2023, despite all the events that happened last year that would’ve pushed them higher. We often see market buyers pouring money into names like Coca-Cola during elevated levels of uncertainty because these companies tend to bring steady and predictable numbers, but investors turned a blind eye to that last year. One of the biggest challenges KO faced in the last 24 months was inflation and how to adjust to it without scaring their consumers. The company did a great job at adjusting their prices and still keeping their customers buying, sustaining quarterly revenue growth through the first three quarters of 2023. They’ll be reporting fourth quarter earnings on February 13th, which they’re expected to beat considering the holidays likely brought forth lots of buyers of KO’s products. KO is also expected to surpass expectations because analysts have adjusted their projected EPS from last quarter’s .69 to .48. That’s a significantly lower projection so KO should easily come above that target and continue delivering quarterly growth. 

One thing to keep in mind about companies like KO is that they don’t often make very large moves unless there’s a strong catalyst that’s driving them. KO is no longer considered a growth stock and many investors buy shares for their dividend yield. 

Option chain analysis:

Looking at KO’s option chain for February 16th (same week as earnings), the options market currently reflects a 12.08% implied volatility reading (subject to change as we get closer to that date), which translates to about a $1.51 expected move, but there’s no way of telling which direction that will move to.