Coca-Cola (KO -1.22%) will release its quarterly report next Tuesday after the President's Day holiday, and investors continue to have huge doubts about the beverage giant's future prospects. Even after announcing a major strategic partnership with Green Mountain Coffee Roasters (GMCR.DL), Coca-Cola still faces many unanswered questions about how it can overcome headwinds in its core beverage business. Given that Coca-Cola lacks the more diversified mix of businesses that has helped rival PepsiCo (PEP -0.85%) outperform the cola giant by a substantial margin over the past year, investors aren't convinced that growth can accelerate in the near future.

For decades, Coca-Cola has enjoyed the fruits of what seems like a deceptively simple business model: Sell drinks to thirsty customers. But doing so effectively has involved creating a massive distribution network along with top-notch marketing that vaulted the Coke brand to the top ranks of global brands for several years.

With changing preferences, though, Coca-Cola has had to change gears, and its aggressive Green Mountain move could be a game changer for the industry. Let's take an early look at what's been happening with Coca-Cola over the past quarter and what we're likely to see in its report.

Stats on Coca-Cola

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$11.31 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Coca-Cola earnings fizz up or fall flat this quarter?
In recent months, analysts have pulled back just a bit on their views about Coca-Cola earnings, cutting a penny per share from their fourth-quarter estimates and $0.02 per share from their full-year 2014 projections. The stock has drifted downward, falling about 3% since early November.

Coca-Cola's third-quarter earnings revealed the challenges and successes that the beverage giant has had in dealing with tough conditions in the beverage industry. Sales dropped 3%, but Coca-Cola said that those declines came from currency fluctuations as well as the removal of bottling operations in Brazil and the Philippines from the company's consolidated results. Overall volume growth came in at 2%, with international results outpacing domestic growth. Cost-cutting measures helped the company avoid falling net income, with earnings rising 6% and helping the stock gain after the announcement.

But what many investors haven't yet realized is that Coca-Cola is rapidly assembling two separate businesses under one roof. On one hand, sugary sparkling beverages have raised health concerns, with the threat of regulation hitting Coca-Cola and PepsiCo as well as other smaller soft-drink companies. Yet on the other end of the spectrum, Coca-Cola's tea lines have seen double-digit percentage sales growth in North America, showing the value of innovation and consciousness of changing health needs.

Still, Coca-Cola isn't afraid to seek out growth opportunities even if they involve aggressive moves, and the company's 10-year partnership with Green Mountain certainly qualifies as a risky move even for the beverage giant. The companies didn't release all the details of the deal, but some of the terms included a $1.25 billion stock investment in Green Mountain that will give Coca-Cola 10% ownership of the Keurig home-brewing machine. With Green Mountain hoping to have a Keurig Cold home-soda system available sometime in 2015, Coca-Cola could have a ground-floor opportunity to seek out exclusivity and cash in if the soft drink maker proves a success. Given how Green Mountain has transformed the coffee industry with its home-brewer machines, there's every reason to think that a Coca-Cola/Green Mountain team effort could produce similar positive results.

One question going forward will be how PepsiCo responds to Coca-Cola's bold strategy. Last year, PepsiCo firmly quashed speculation about a possible buyout of home-soda maker SodaStream. Yet after Coca-Cola's Green Mountain move, some believe that PepsiCo might have to answer with a deal of its own, whether it involves SodaStream or its own independent initiative to make it easier for consumers to make their own beverages.

In the Coca-Cola earnings report, watch for the company to give more details on its broader strategy surrounding the Green Mountain deal. If investors like what they hear, then they might be more willing to ignore some of the longer-term challenges to growth that have plagued Coca-Cola for a long time.

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