The Coca-Cola Company (KO – Analyst Report) is set to report fourth-quarter and full-year 2015 results on Feb 9, before the market opens. Last quarter, the company delivered a positive earnings surprise of 2.00%.

In fact, the cola giant surpassed earnings estimates in all the past four quarters with an average surprise of 5.85%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Coca-Cola’s aggressive cost-cutting and strategic initiatives improved results in 2015. Disciplined quality advertising investments supported volume growth in the first three quarters of 2015, especially in North America. We expect the trend to continue in the fourth quarter as well.

However, the North American sparkling beverage business has been delivering sluggish results dueto CSD category headwinds. Cross-category competition and growing health and wellness consciousness are hurting the category’s growth. We do not expect any improvement in CSD sales in the to-be-reported quarter.

Moreover, the macroeconomic environment is likely to remain volatile, especially in the emerging markets.

While the macro environment is improving in the U.S., management expects continued challenges in many key emerging/developing markets like Brazil, Russia and China in the fourth quarter. Moreover, with more than half of its revenues coming from outside the U.S., the company’s international profits will remain under pressure because of the strengthening U.S. dollar.

Fourth-quarter comparable currency-neutral EPS is expected to decline in a mid-to-high single-digit range. Structural changes are expected to have a slightly negative impact on sales, and hurt profit-before-tax by 2%.

Fourth-quarter profits are expected to be hurt by six fewer selling days in 2015 and substantially higher marketing expenses.

Earnings Whispers

Our proven model does not conclusively show that Coca-Cola is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

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