3 Things to Watch for in Coca-Cola’s Earnings

Coca-Cola (NYSE: KO  ) is set to report earnings before the market opens on Tuesday. Here's what you need to watch for in the company's results.

Tempered expectations
The first issue that needs to be addressed after earnings are released is whether the cola giant met Wall Street's expectations. Analysts tack profits for Coke at $0.44 per share this quarter . Coca-Cola booked earnings per share of $0.95 in the same quarter last year , so the company is expecting a decline in profit growth. The company reported $12.2 billion in sales for last year's Q3, and $46.5 billion for the full year .

Sales growth
Third-quarter 2012 net revenues grew 1%, with the company enjoying volume growth across every geographic group . Coca-Cola's Q3 earnings announcement showcased strong unit case volume growth for key emerging markets -- Thailand and India grew at 19% and 15%, respectively . Even though sales outside the U.S. already stand at roughly 80% of Coke's worldwide volume, the company is aggressively pursuing growth in relatively untapped emerging markets.

For example, Coke possesses only a fraction of the market penetration in India as it has in the U.S. , yet India contains nearly four times as many people . With this Asian nation as one of the last frontiers for cola companies, rivals Coke and PepsiCo (NYSE: PEP  ) are putting out all the stops to gain market share. Coke has historically eaten PepsiCo's dust in India, but is closing the gap . In the company's quest to double revenue and volume in a decade , Coke plans to spend $5 billion in India by 2020 .

Product innovation
Coca-Cola's future success lies in the breadth and depth of its product pipeline. Non-carbonated drinks are growing at a faster rate than carbonated beverages . As consumers become more health and calorie conscious, this trend is expected to continue. Even though Coca-Cola remains heavily dependent on carbonated soft drinks, it's admirably grown its non-carbonated offerings, most recently by gaining a majority ownership stake in Zico  coconut water. I'll be looking for reported sales growth in Coke's non-carbonated drinks.

Foolish bottom line
Soda sales at U.S. stores declined 0.6% in 2012, and December alone accounted for a 2.8% slump in sales . Given that, I'll especially be watching to see exactly if and how Coca-Cola achieved its fourth-quarter sales growth. I'll also be looking for Coca-Cola's reported case volume growth in key emerging markets.

There is absolutely no question that Coca-Cola has been great to long-term shareholders, but the company faces some new threats to its continued market dominance. We've recently compiled a premium research report containing everything you need to know about Coca-Cola. If you own or are considering owning shares in the company, you'll want to click here now and get started!


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