The 2024 Q3 earnings season has commenced vigorously, showcasing a diverse array of companies unveiling their quarterly performances with promising earnings growth projections despite recent adjustments. This shift highlights a contrast with prior periods, hinting at constructive results.
For a closer examination, two high-profile companies, Tesla and Coca-Cola, stand at the forefront of the imminent quarterly releases this week.
Tesla’s Profitability Hurdles
Amidst the unveiling of its Q3 production and delivery statistics, Tesla’s EV production and delivery figures are under intense scrutiny, dictating significant price fluctuations. Despite delivering approximately 463k EVs and producing nearly 470k units in the recent period, Tesla has consistently fallen short of consensus expectations in the EV delivery realm.
However, the primary driver of negative market sentiment has been the significant decline in margin figures over the recent quarters, attributed to increased costs. The downward trend in gross margin over the trailing twelve months accentuates this concern.
Projections for the forthcoming release hint at a slightly bearish outlook, with a modest decline in the Zacks Consensus EPS estimate to $0.58 from July-end, indicating a 12% year-over-year decrease. Despite an anticipated 10% sales surge year-over-year, the looming margins challenge underscores a profitability squeeze.
Coca-Cola’s Share Surge
Contrary to expectations, consumer goods giant Coca-Cola has closely mirrored the S&P 500 in 2024, boasting a remarkable 22% increase in share value. This upward trajectory becomes more remarkable given the prevailing tech-dominated risk-on market ambiance.
The resurgence in margins plays a pivotal role in Coca-Cola’s robust share performance, marking a stark reversal from the high-cost woes faced in 2022. The profitability trend, now favorable over recent periods, has been a significant contributor to the company’s stock uptick.
Stability characterizes the earnings and revenue forecasts for the forthcoming quarter, with Coca-Cola anticipated to report stagnant earnings growth coupled with a modest 3% sales decline. Positive affirmations regarding profitability and the reaffirmation of their enhanced 2024 guidance could serve as a positive catalyst post-earnings.
The stock valuation portrays a balanced picture, aligning closely with historical averages. With a forward 12-month earnings multiple of 23.4X, the stock remains near the 23.8X five-year median and marginally below the five-year peak of 26.6X. Although the current PEG ratio of 3.8X appears steep, it still maintains parity with historical norms, as indicated by the ‘D’ Value Style Score.
In Conclusion
The onset of the earnings season ushers in an era of excitement for investors as companies reveal the previously concealed intricacies of their operations.
Among the notable releases slated for this week are Tesla and Coca-Cola, poised to provide key insights into their financial performance.
7 Top Stocks for the Near Future
Recently disclosed: Experts have identified 7 premier stocks from a selection of 220 Zacks Rank #1 Strong Buys, deeming these options “Most Likely for Early Price Pops.”
Since 1988, this exclusive list has outperformed the market, delivering an average annual gain exceeding +23.7%. It is imperative to focus on these meticulously chosen 7 stocks promptly.