Group 1 - Coca-Cola has outperformed the Consumer Staples sector with a year-to-date return of approximately 15.1%, compared to the sector's average gain of 6.3% [4] - The Zacks Rank for Coca-Cola is currently 2 (Buy), indicating a positive earnings outlook with a 0.3% increase in the consensus estimate for full-year earnings over the past quarter [3] - Coca-Cola belongs to the Beverages - Soft drinks industry, which has an average gain of 8.1% this year, further highlighting its strong performance within its specific industry [5] Group 2 - Unilever PLC, another stock in the Consumer Staples sector, has a year-to-date return of 8.4% and also holds a Zacks Rank of 2 (Buy) with a 0.2% increase in its consensus EPS estimate over the past three months [4][5] - The Beverages - Soft drinks industry, which includes Coca-Cola, is ranked 163 in the Zacks Industry Rank, while Unilever falls under the Consumer Products - Staples industry, ranked 156, which has seen a decline of -1.7% since the beginning of the year [5][6]

Core Insights - Starbucks Corporation (SBUX) is facing challenges from rising input costs and changing trade dynamics in fiscal 2025, particularly due to heightened tariff exposure and commodity inflation, leading to a 450-basis-point year-over-year decline in consolidated operating margin in Q2 FY25 [1][8] Group 1: Company Response - In response to cost pressures, Starbucks is implementing measures such as deploying a cross-functional team to manage tariff-related risks and shifting production for key merchandise to alternate sites ahead of the holiday season [2] - The company is localizing and relocating certain supply-chain functions to further reduce exposure, while benefiting from its global procurement footprint and hedging strategy in coffee sourcing [2] Group 2: Pricing Strategy - Starbucks intends to hold prices steady through fiscal 2025 to reinforce its value proposition amid economic uncertainty, and plans to enhance pricing clarity through app updates [3] Group 3: Industry Context - Other coffee brands like J. M. Smucker Company (SJM) and Keurig Dr Pepper Inc. (KDP) are also managing similar cost pressures, with J.M. Smucker reporting a 9% year-over-year decline in adjusted gross profit in Q4 FY25 and Keurig Dr Pepper experiencing a 3.7% decline in U.S. Coffee revenues in Q1 FY25 [4][5][6] Group 4: Financial Performance - Starbucks shares have gained 20.9% over the past year, outperforming the industry's 12% growth [7] - The Zacks Consensus Estimate for SBUX's fiscal 2025 earnings per share has decreased recently, with current estimates at $2.48 for the current year and $2.99 for the next year [10] - SBUX is currently trading at a forward 12-month price-to-earnings ratio of 32.03, compared to the industry's 25.99 [12]

Group 1 - Coca-Cola's stock closed at $69.74, reflecting a 1.31% increase, outperforming the S&P 500's 0.96% gain on the same day [1] - Over the past month, Coca-Cola shares have decreased by 4.08%, underperforming the Consumer Staples sector's loss of 1.5% and the S&P 500's gain of 0.5% [1] Group 2 - Coca-Cola is expected to report earnings of $0.83 per share on July 22, 2025, indicating a year-over-year decline of 1.19%, while projected revenue is $12.61 billion, a 1.99% increase from the same quarter last year [2] - For the full year, earnings are projected at $2.97 per share and revenue at $48.25 billion, reflecting increases of 3.13% and 2.54% respectively from the previous year [3] Group 3 - Recent changes to analyst estimates for Coca-Cola are linked to stock price performance, with positive revisions indicating optimism about the business outlook [3][4] - The Zacks Rank system, which assesses estimated changes, currently ranks Coca-Cola at 3 (Hold) [5] Group 4 - Coca-Cola has a Forward P/E ratio of 23.22, which is higher than the industry average of 19.39, and a PEG ratio of 3.61 compared to the industry average of 2.61 [6] - The Beverages - Soft drinks industry, part of the Consumer Staples sector, holds a Zacks Industry Rank of 91, placing it in the top 37% of over 250 industries [7]

Company Overview - Celsius Holdings Inc. operates in the Soft Drinks & Non-alcoholic Beverages industry, with approximately 95% of its revenues generated from the U.S. market and the remaining from international markets [1]. Product Focus - The company is engaged in the development, processing, marketing, sale, manufacturing, and distribution of energy and functional drinks, along with other products [1].

Core Insights - Monster Beverage Corporation (MNST) shares have increased by 15.6% over the past three months, outperforming the Zacks Beverages - Soft drinks industry and the S&P 500 index, which grew by 1.5% and 7% respectively, indicating strong business strategies and market positioning [1][7]. Stock Performance - MNST stock is currently trading at $63.69, close to its 52-week high of $64.45 reached on May 28, 2025, suggesting a potential investment opportunity for those looking for long-term growth in the beverage sector [3]. - The stock shows solid momentum, remaining above its 200-day moving average, which reflects underlying strength and bullish sentiment among investors [4]. Financial Performance - In Q1 2025, Monster Beverage exceeded earnings expectations, with earnings per share surpassing forecasts, driven by improved gross margins from effective pricing strategies and supply-chain optimization [5][12]. - Consumer demand for energy drinks remains strong, with notable retail sales growth in the U.S. and international markets, including China, Australia, South Korea, and several European countries [6][9]. Challenges - The Alcohol Brands segment faced significant challenges, with net sales declining by 38.1% year-over-year due to reduced sales volumes and adverse currency impacts [10][11]. - The company is navigating a complex tariff landscape, with minimal impact on operating results in Q1, and is exploring mitigation strategies [8]. Future Outlook - The Zacks Consensus Estimate projects a 14.8% year-over-year increase in EPS for fiscal 2025, followed by an 11.8% increase in 2026, reflecting positive sentiment around the company's growth potential [12]. - Monster Beverage continues to innovate with new product launches, including the successful Monster Energy Ultra Blue Hawaiian, and aims to expand its affordable energy brands globally [9].

Financial Data and Key Metrics Changes - The preliminary voting results indicated that all director nominees were duly elected to serve until the 2026 annual meeting [21] - The selection of Ernst and Young LLP as the independent registered public accounting firm for the fiscal year ending 12/31/2025 was ratified by approximately 100% of the votes cast [22] - A nonbinding advisory vote on the compensation of the company's named executive officers was approved by approximately 94% of the votes cast [22] Business Line Data and Key Metrics Changes - The company launched several new products in the first quarter, including two new full sugar Monster flavors and various strategic brands in EMEA [27][28] - The Ultra family of products has been growing at over 20% [45] - The company is expanding its Predator brand in various markets, including a national rollout in China [29][56] Market Data and Key Metrics Changes - According to Nielsen, sales in the energy drink category increased by 12.5% year-over-year, with Monster's sales increasing by 10.1% [31] - In Mexico, Monster's sales increased by 17.6%, and its market share rose to 31.2% [34] - In EMEA, the energy drink category grew approximately 13.6% year-over-year, with Monster's market share increasing in several countries [35][36] Company Strategy and Development Direction - The company continues to focus on expanding its energy drink category while exploring opportunities in other beverage categories, including alcoholic beverages [52] - The upcoming launch of Blind Lemon, a new hard lemonade line, is part of the strategy to boost profitability in the Alcohol Brands division [53] - The company is optimistic about the long-term prospects for the Monster brand in China and is excited about the rollout of Predator [56] Management's Comments on Operating Environment and Future Outlook - Management noted a strong recovery in the U.S. energy category, driven by functionality, value proposition, and diverse offerings [43][44] - The company is focused on long-term value creation opportunities and optimizing trade spend [51] - Management expressed confidence in the company's growth strategy and innovation pipeline for 2026 and beyond [62] Other Important Information - The company highlighted that Nielsen data does not capture all sales channels, including foodservice and e-commerce [30] - The company acknowledged the impact of increased input costs and tariffs on aluminum but does not expect a significant impact on gross margins in the short term [49][50] Q&A Session Summary Question: Key factors behind the recovery and sustainability of revenue growth in the U.S. Energy category - Management attributed recovery to functionality, affordable value, image, and diverse offerings appealing to a broad consumer base [43][44] Question: Drivers of strong industry-wide scanner data and consumer preferences - Management noted growth from new consumers, particularly younger females, and a narrowing price differential between energy drinks and other beverages [47][48] Question: Strategy for protecting gross margins - Management discussed input cost increases and a hedging strategy for aluminum, emphasizing ongoing cost savings and pricing evaluations [49][50] Question: Role of Alcohol Brands division in overall strategy - Management stated the focus remains on energy drinks while exploring growth in alcoholic beverages, including the launch of Blind Lemon [52][53] Question: Update on dual brand price point strategy in China - Management highlighted optimism for the Monster brand in China and the rollout of Predator as a key growth driver [56][57] Question: Ongoing involvement of Rodney Sachs in the company - Management confirmed that Rodney Sachs will focus on marketing and innovation while remaining involved in legal matters [58][60]

Core Viewpoint - PepsiCo's stock performance has lagged behind the broader market, with a recent decline and projected earnings showing a year-over-year decrease [1][2]. Financial Performance - The upcoming earnings report on July 17, 2025, is expected to show earnings of $2.04 per share, a decline of 10.53% year-over-year, with projected revenue of $22.37 billion, reflecting a 0.6% decrease from the same quarter last year [2]. - For the entire fiscal year, earnings are projected at $7.87 per share, down 3.55% from the prior year, while revenue is expected to be $92.2 billion, an increase of 0.38% [3]. Analyst Estimates and Ratings - Recent changes in analyst estimates for PepsiCo are crucial, as they reflect near-term business trends, with positive revisions indicating a favorable outlook [3][4]. - The Zacks Rank system currently rates PepsiCo at 4 (Sell), with the consensus EPS estimate moving 0.18% lower over the past month [5]. Valuation Metrics - PepsiCo is trading at a Forward P/E ratio of 16.75, which is below the industry average of 19.23, suggesting a relative discount [6]. - The company has a PEG ratio of 3.79, compared to the industry average of 2.56, indicating higher expected earnings growth relative to its price [7]. Industry Context - The Beverages - Soft drinks industry, part of the Consumer Staples sector, holds a Zacks Industry Rank of 61, placing it in the top 25% of over 250 industries [7].

Group 1 - PepsiCo's stock closed at $131.83, with a +1.44% increase, outperforming the S&P 500's gain of 0.55% for the day [1] - Over the past month, PepsiCo shares declined by 1.31%, underperforming the Consumer Staples sector, which gained 1.91%, and the S&P 500, which gained 6.29% [1] Group 2 - The upcoming earnings report for PepsiCo is scheduled for July 17, 2025, with an expected EPS of $2.04, reflecting a 10.53% decrease from the prior-year quarter [2] - Revenue is anticipated to be $22.37 billion, indicating a 0.6% decline from the same quarter last year [2] Group 3 - For the fiscal year, earnings are projected at $7.87 per share and revenue at $92.2 billion, representing changes of -3.55% and +0.38% respectively from the prior year [3] - Recent analyst estimate revisions are crucial as they reflect near-term business trends, with positive revisions indicating a favorable business outlook [3][4] Group 4 - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), shows that PepsiCo currently holds a Zacks Rank of 4 (Sell) [5] - The Forward P/E ratio for PepsiCo is 16.51, which is lower than the industry average of 19.21 [5] Group 5 - PepsiCo has a PEG ratio of 3.73, compared to the average PEG ratio of 2.56 in the Beverages - Soft drinks industry [6] - The Beverages - Soft drinks industry is part of the Consumer Staples sector and holds a Zacks Industry Rank of 45, placing it in the top 19% of over 250 industries [6][7]

Core Insights - The Coca-Cola Company (KO) has demonstrated strong growth, reflecting its robust market positioning and brand power compared to other non-alcoholic beverage companies [1] - Concerns arise regarding KO's current forward 12-month price-to-earnings (P/E) multiple of 23.37X, which is significantly higher than the industry average of 18.68X, suggesting the stock may be overvalued [2][5] - The price-to-sales (P/S) ratio of 6.27X also exceeds the industry's 4.46X, contributing to investor unease, particularly given its Value Score of F [3] Valuation Concerns - KO's premium valuation at 23.37X P/E is significantly above peers like PepsiCo (16.13X), Keurig Dr Pepper (15.7X), and Primo Brands (18.13X), indicating a potential disconnect between valuation and growth trajectory [5][6] - Despite a year-to-date share price increase of 15.3%, which outperformed the broader industry and major indexes, the high valuation raises questions about sustainability [7][8] Financial Performance - Coca-Cola reported a 12% organic revenue growth, driven by strong pricing and recovery in away-from-home consumption, showcasing resilience amid macroeconomic uncertainties [14] - The company has outperformed competitors like PepsiCo and Keurig Dr Pepper, which saw declines of 21.3% and 2.6% respectively, while KO's performance is still below Primo Brands' growth of 29.5% [8] Market Positioning - KO's current share price of $71.77 is 3.5% below its 52-week high of $74.38 and 18.4% above its 52-week low of $60.62, indicating a bullish sentiment as it trades above its 50 and 200-day moving averages [12] - The company's disciplined brand-building strategy and marketing investments have resonated well, particularly with products like Coca-Cola Zero Sugar, which has seen double-digit growth [16] Strategic Outlook - Coca-Cola's ability to innovate and engage with younger, health-conscious consumers is crucial for maintaining its market leadership [17] - The company is focused on margin resilience through productivity initiatives and pricing power, despite facing inflationary pressures and currency fluctuations [18] - Management's confidence is reflected in the full-year guidance, indicating a strong belief in the underlying business fundamentals [15] Earnings Estimates - The Zacks Consensus Estimate for Coca-Cola's 2025 EPS remains unchanged, while the estimate for 2026 EPS has seen a slight upward revision, indicating analysts' confidence in the stock [20] - For 2025, the consensus estimates imply 2.4% revenue growth and 2.8% EPS growth, with 2026 estimates suggesting 5.3% revenue growth and 8.2% EPS growth [20] Investment Considerations - Despite premium valuation concerns, Coca-Cola's strong fundamentals, brand equity, and strategic direction present a compelling case for long-term investors [23][24] - The company's global scale and disciplined execution support its growth trajectory across diverse markets, making it a potential addition to a diversified portfolio [25][26]

Industry Overview - The Zacks Beverages – Soft Drinks industry is characterized by strong growth potential driven by rising consumer demand for healthier, functional, and eco-friendly beverages [1] - Companies are innovating and diversifying their portfolios to capture new market opportunities [1] - The industry is experiencing a digital transformation with brands adopting direct-to-consumer channels and subscription models to enhance customer relationships [1] Current Challenges - The industry faces persistent headwinds such as elevated input costs, supply-chain disruptions, and tariff-related uncertainties that pressure margins [2] - Rising packaging and freight expenses, along with volatile commodity prices, challenge profitability [2] - Newly imposed U.S. tariffs on imports from Canada and Mexico create additional financial pressure and uncertainty [6] Consumer Trends - There is a significant shift in consumer preferences towards healthier beverage options, including drinks made with natural ingredients and reduced sugar [4] - Plant-based beverages and functional drinks that promote hydration and energy are gaining popularity among health-conscious consumers [4] - Companies are expanding into adjacent categories, such as ready-to-drink alcoholic beverages, to capitalize on these trends [4] Digital Growth & Innovation - The industry is leveraging digital transformation to enhance consumer engagement and boost growth [5] - Brands are investing in direct-to-consumer platforms and subscription-based models to secure recurring revenue [5] - Product innovation remains a key growth driver, with companies refining their portfolios and launching new products [5] Financial Performance - The Zacks Beverages – Soft Drinks industry currently holds a Zacks Industry Rank of 63, placing it in the top 26% of over 250 Zacks industries, indicating bright near-term prospects [8] - The industry has underperformed the Consumer Staples sector and the S&P 500 Index over the past year, with a collective growth of 0.4% compared to the sector's 3.5% and the S&P 500's 11.9% [10] Valuation Metrics - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 18.68X, compared to the S&P 500's 21.97X and the sector's 17.75X [13] - Over the past five years, the industry's P/E ratio has ranged from a high of 23.8X to a low of 17.22X, with a median of 21.45X [13] Notable Companies - **Coca-Cola (KO)**: Positioned for long-term growth through strategic transformation and digital investments, with a projected sales growth of 2.4% and earnings growth of 2.8% for 2025 [17][18] - **Zevia (ZVIA)**: Focused on zero-sugar, naturally sweetened drinks, with a projected sales growth of 3.4% and earnings growth of 38.7% for 2025 [21][22] - **Monster Beverage (MNST)**: Continues to perform well in the energy drinks category, with projected sales growth of 5.9% and earnings growth of 14.8% for 2025 [24][25] - **Keurig Dr Pepper (KDP)**: Expected to benefit from growth in the Refreshment Beverages segment, with projected sales growth of 5.6% and earnings growth of 6.3% for 2025 [28][29] - **Primo Brands (PRMB)**: Specializes in healthy hydration with a projected sales growth of 145.6% and earnings growth of 52.5% for 2025 [33]