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Coca-Cola Announces Its New Investment Plans

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Dec. 1 2016, Published 1:25 p.m. ET

Price movement

Coca-Cola Company (KO) has a market cap of $174.0 billion. It fell 1.9% to close at $40.35 per share on November 30, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -1.6%, -4.0%, and -3.0%, respectively, on the same day.

KO is trading 2.2% below its 20-day moving average, 2.9% below its 50-day moving average, and 6.6% below its 200-day moving average.

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Related ETF and peers

The Schwab US Broad Market ETF (SCHB) invests 0.75% of its holdings in Coca-Cola. The YTD price movement of SCHB was 10.0% on November 30.

The market caps of Coca-Cola’s competitors are as follows:

  • PepsiCo (PEP) — $143.6 billion
  • Dr Pepper Snapple Group (DPS) — $15.9 billion

Latest news on Coca-Cola

Coca-Cola announced on November 30, 2016, that it “formally has opened its first factory in the Gaza Strip, the company announced Wednesday, in a move that could create hundreds of jobs in the beleaguered Palestinian enclave. The bottling facility had been partially open for several months but began full operations after a ceremony Wednesday.

“The $20-million (19-million euro) investment is the company’s first plant in Gaza and will create around 120 jobs immediately, a statement said, with an eventual expansion to 270.”

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Coca-Cola’s performance in 3Q16

Coca-Cola (KO) reported 3Q16 net operating revenues of $10.6 billion, a YoY (year-over-year) fall of 7.0% from its net operating revenues of $11.4 billion in 3Q15. The fall was due to the impact of foreign exchange and acquisitions, divestitures, and structural items.

Net operating revenues from EMEA (Europe, the Middle East, and Africa), Latin America, and the Bottling Investments segment fell 4.2%, 4.6%, and 18.6%, respectively. Net operating revenues from North America and Asia-Pacific rose 3.3% and 3.8%, respectively, between 3Q15 and 3Q16.

The company’s gross profit margin and operating margin expanded 80 basis points and 60 basis points, respectively. The operating margin includes the impact of foreign exchange and structural changes.

Net income, EPS, and cash

Coca-Cola’s net income and EPS (earnings per share) fell to $1.0 million and $0.24, respectively, in 3Q16, compared to $1.4 million and $0.33 in 3Q15. It reported non-GAAP[1. generally accepted accounting principles] EPS of $0.49 in fiscal 3Q16—a YoY fall of 3.9%.

KO’s total cash, cash equivalents, and short-term investments rose 43.6% YoY, and its inventories fell 3.4% between 4Q15 and 3Q16.

Projections

Coca-Cola (KO) has made the following projections for fiscal 2016:

  • organic revenue growth of 3.0%
  • comparable currency-neutral income before taxes to rise 6.0%–8.0%
  • comparable EPS to fall 4.0%–7.0%

Next, we’ll take a look at General Mills (GIS).

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