Coca-Cola (KO, quote) reported earnings today and is being punished as analysts’ were looking for slightly higher revenue.
But is this a case of the analysts not getting it right?
Coca-Cola’s net income came in at $0.41 per share or $1.9 billion compared to the previous year of $0.39 per share or $1.8 billion. Excluding onetime charge off items and Coca-Cola earned $0.45 per share beating analysts’ expectations of $0.44 per share.
So why the sell off if Coca-Cola beat by a penny?
After digging into the earnings report the big difference between the Coca-Cola planed growth vs. analyst expectations in couple of key matrix that stands out in my view, case volumes and bottle sales.
When comparing the actual case volumes to many of the analysts’ expectations it appears they are the lighter side of expectations. However, when looking at company plan growth targets we find case volume were inline at 3%. Analysts were looking for 3.6% even though the company set expectations of 3% to 4%. The other big “miss” was in bottling where company grew by 5% vs. expectations of 10% and again there seems to be disconnection between company guidance vs. analysts. It seems the Coca-Cola set clear targets and goals but yet expectations were set beyond by the market.
Looking beyond North America – Coca-Cola is seeing great growth in emerging markets with sales in Euro, Asia and Africa jumping by 5% and income higher by 18%.
In the Pacific Coca-Cola saw a decline of 1% in sales but grew income by 11%. In another growth area Latin America sales jumped by 8% as income by 10%.
Coca-Cola did well domestically as well with sales increasing by 6% and income jumping by 12%.
Now in Europe Coca-Cola saw significant headwinds in sales by falling 6% as the company faced weakening consumer confidence along with necessity to aggressively discount products. Not unexpected for turmoil in the euro zone and it appears the company is trying to manage the turmoil and limit exposure.
For 2012 Coca-Cola earned $2.01 per share or $9.2 billion on $48.03 billion in sales. This is an increase in revenue from the previous years of $1.92 per share or $8.9 billion on $46.55 billion in sales.
Coca-Cola has now met or exceeded the company’s guidance and target plans for 3 years in a row now and done so in a very volatile global market and despite the euro zone crisis.
Bottom Line: this pull back after earnings could be good opportunity to stick a toe in the water with a company that continues to show growth not only domestically but in all the key emerging markets.