The Biggest Threat to The Coca-Cola Company (KO) Earnings

Page 1 of 2

The Coca-Cola Company (NYSE:KO) is scheduled to release its quarterly earnings report tomorrow, and the soft-drink giant is a prime example of how the slowdown in the global economy has affected prospects for multinational companies that have relied on going beyond their home countries to find profit opportunities. Even though most of the stocks in the Dow Jones Industrials have a multinational component, The Coca-Cola Company (NYSE:KO) in particular has benefited from the worldwide reach of its top-ranked brand: Well more than half its revenue and nearly three-quarters of its profit come from outside North America.

The Coca-Cola Company (NYSE:KO)Lately, though, The Coca-Cola Company (NYSE:KO)’s growth in its international markets has slowed as Europe has suffered economic headwinds and growth rates in emerging-market areas like Latin America and the Pacific region have slowed. Are the good times over for the company? Let’s take an early look at what’s been happening with The Coca-Cola Company (NYSE:KO) over the past quarter and what we’re likely to see in its quarterly report.

Stats on Coca-Cola

Analyst EPS Estimate $0.63
Change From Year-Ago EPS 3.3%
Revenue Estimate $12.97 billion
Change From Year-Ago Revenue (0.9%)
Earnings Beats in Past 4 Quarters 3

Source: Yahoo! Finance.

Will Coca-Cola earnings stay fizzy or fall flat this quarter?
In recent months, analysts have been a little bit pessimistic about The Coca-Cola Company (NYSE:KO)’s earnings prospects, cutting $0.02 per share off their June-quarter estimates and a penny per share from their full-year 2013 and 2014 consensus earnings figures. The stock has seen similarly unenthusiastic performance, with shares up less than 1% since early April.

Lately, Coca-Cola has been having a serious growth problem. In its previous quarter, the company saw revenue decline by about 1%, and although it managed to beat earnings and sales expectations, earnings per share didn’t provide any year-over-year growth, even when adjusting for unusual items. International volume growth of 5% sounds reasonably strong, especially given larger gains of 8% to 18% in areas like Thailand, India, and Russia. But China was weak, and with the continued pressure on the Chinese economy, those difficulties might persist for quite a while.

In order to bolster growth, The Coca-Cola Company (NYSE:KO) has made a number of innovative moves. Its Freestyle fountain machine has started to gain in popularity, as restaurant chains including Burger King Worldwide Inc (NYSE:BKW) have signed on to put machines in their stores. Burger King Worldwide Inc (NYSE:BKW) will implement the mix-and-match soda machines in its company-owned locations, likely hoping to benefit from their novelty factor, as many of Burger King’s restaurants give customers direct access to fountain drinks. Coca-Cola could also use the machines as an environmentally friendly rebuttal to SodaStream International Ltd (NASDAQ:SODA) and its attacks on the drink giant, as Freestyle doesn’t require bottling and therefore has the same advantages as SodaStream International Ltd (NASDAQ:SODA)’s home carbonators. SodaStream’s campaigns have been fairly effective in highlighting the value of its own product, although it’s a stretch to blame Coca-Cola’s struggles on the carbonator-maker. Meanwhile, in its efforts to help make its product more available even in areas without electricity, Coca-Cola started an initiative to provide small solar-power kits to kiosk owners in Kenya.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!