| As of Friday, August 14th: |
Since the start of the quarter, the Q2 growth rate has risen from -31.7% to -28%. (Data provided by Thomson Reuters)
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Coca-Cola reported a better-than-expected quarterly profit Tuesday, aided by growth in emerging markets, but its shares fell as revenue was lighter than anticipated and investors looked for stocks with stronger growth potential.
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Seth Perlman / AP Coca-Cola Bottles |
The world's largest soft-drink maker's broad geographic footprint, especially in developing markets such as India and China, helped it weather an industry-wide slowdown in the United States.
Coke gets the bulk of its revenue from abroad, where soft-drink sales are still growing despite the weak global economy. Still, revenue declined more than analysts expected as growth slowed and the stronger U.S. dollar reduced the value of international sales.
Excluding items, profit fell 9 percent to 92 cents per share, topping analysts' average forecast of 89 cents per share, according to Reuters Estimates.
Despite the stronger-than-expected profit, Coke's shares [KO
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"I'm not so sure that it's Coke so much as maybe the shift toward more cyclical issues like Caterpillar," said Hank Smith, chief investment officer for Haverford Investments, which has owned Coke shares for 30 years and bought shares of Caterpillar last week.
Shares of Caterpillar [CAT
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Shares of Coke have risen about 25 percent since the beginning of March, in line with a rebound in the Dow Jones industrial average. Caterpillar has soared nearly 50 percent.
"While this has been a broad-based rally, it's been led by the more economically sensitive sectors and issues and I think that is the market behaving as a leading indicator, forecasting a recovery in the economy," said Smith.
Volume Rises, Revenue Falls
Atlanta-based Coke's net income was $2.04 billion, or 88 cents per share, in the second quarter ended July 3, up from $1.42 billion, or 61 cents per share, a year earlier.
Currency reduced comparable operating income by 14 percent in the quarter. Coke expects an estimated 12 percent to 14 percent hit in the third quarter and a low single-digit hit in the fourth, slightly worse than some analysts had expected.
Volume rose 4 percent after rising just 2 percent in the first quarter.
Volume fell 1 percent in North America but rose 5 percent internationally, driven by gains of 33 percent in India and 14 percent in China. International sales growth overall had been in the 5-percent-to-7-percent range last year.
Operating revenue fell 9 percent to $8.27 billion, missing analysts' average expectation of about $8.57 billion, according to Reuters Estimates.
The future of Coke's North American business model, through which it sells drink concentrate to a network of independent bottlers that in turn bottle and distribute the drinks, has been called into question after rival PepsiCo [PEP
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Coke Chief Executive Muhtar Kent has several times defended the company's franchise model, but analysts have said that if PepsiCo succeeds in its bid, Coke may have to follow suit to erase what would likely be a large competitive disadvantage.
"We believe our unique global franchise model is the best way to win in the market," Kent said in a statement Tuesday.
Coke does not provide specific earnings forecasts, but said in April it was looking to reach its long-term target of 3-percent-to-4-percent volume growth and high single-digit earnings-per-share growth this year.
- Lowe's Shares Take Hit as Profit, Guidance Disappoint
Profit at Lowe's, the second-largest home improvement retailer in the US, fell 19 percent in the second quarter, missing analysts' expectations, the company said Monday.
- JCPenney Beats, But Year Could Be Tough
JCPenney posted a smaller-than-expected net loss as the retailer kept a tight lid on costs, but signaled results could miss expectations later this year, sending its shares lower.
- Abercrombie & Fitch Posts Loss as Sales Slump
Abercrombie & Fitch reported a quarterly loss as sliding sales, higher markdowns and increased costs weighed on the teen-apparel retailer.
- Lowe's Shares Take Hit as Profit, Guidance Disappoint
- Nordstrom Meets Street, Raises Guidance
Nordstrom posted a steep decline in quarterly profit Thursday that nevertheless met Wall Street's expectations, as the upscale department store chain controlled inventory and expenses to offset languishing sales.
- Nordstrom Meets Street, Raises Guidance
- Wal-Mart Profit Tops Street; Same-Store Sales Lower
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Data is a real-time snapshot *Data is delayed at least 15 minutes