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What to watch for in Coca-Cola earnings


MARKETWATCH 6:59 AM ET 07/22/14


Symbol Last Price Change
KO 42.4 0 (0%)
GMCR 120.74down 0 (0%)
QUOTES AS OF 04:00:50 PM ET 07/21/2014

SAN FRANCISCO (MarketWatch) -- Coca-Cola Co.(KO) releases its second-quarter results before the opening bell Tuesday. This is what investors are looking for:

Earnings: Coca-Cola (KO), the nation's biggest non-alcoholic beverage company by market-cap and a member of the Dow Jones Industrial Average since 1987, is expected to report earnings of 63 cents a share for the three months ended June 30, matching its per-share earnings a year earlier, according to a FactSet survey of Wall Street analysts.

Revenue: Analysts are looking for second-quarter sales of $12.83 billion, nearly a 0.7% improvement from $12.75 billion year ago. Bear in mind, however, that Chairman and CEO Muhtar Kent summed up the year-ago results at the time as "below our expectations," with worldwide volume growth up a mere 1%.

Stock reaction: Coca-Cola's share price is up has hit analysts' earnings targets on the nose for each of its four previous quarters, which makes it both reliable and a little boring. Its share price has been a bit boring as well, up 3% from where it was trading 12 months ago while the Dow industrials index is up nearly 10%.

To add a little life to its earnings, Coke has built up a 16% stake in Keurig Green Mountain Inc.(GMCR) , joining forces with the coffee brewer to develop a dispenser and supplies for the burgeoning DIY cold-drink sector.

So far, Keurig investors have been the primary beneficiaries of this venture, with the company's share price up 64% over the past 12 months. Investors are waiting for some of this to trickle up to Coke's share price, and will be paying close attention to any updates on the partnership. Among the scenarios circulating on Wall Street is that Coke, already Keurig's largest shareholder, could at some point buy the company outright.

Meanwhile, Coke is contending with relatively flat sales in North American market, which analysts expect will account for sales of about $5.82 billion, or 45%, of second-quarter sales. Changing demographics, rival sports drinks and a greater emphasis on health are widely blamed for Coke's struggles to boost sales at home.

That means sales growth in the traditional beverages market probably is going to have to be overseas, especially in the European and Pacific markets.

Analysts are looking for second-quarter sales in Europe to hit $1.65 billion while Pacific market sales are expected to reach $1.56 billion.

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-Jim Jelter; 415-439-6400; [e-mail]

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