Stock reaction to 4Q results
Coca-Cola (KO) stock rose 0.4% on February 16 following the company’s 4Q17 results. The company surpassed analysts’ revenue and earnings expectations for fiscal 4Q17. However, Coca-Cola’s revenue continued to decline for the 11th straight quarter due to the impact of the refranchising of its bottling operations.
As of February 16, the stock of the leading soda beverage maker has fallen 2.0% on a YTD (year-to-date) basis. In comparison, PepsiCo (PEP), Dr Pepper Snapple (DPS), and Monster Beverage (MNST) have risen -7.4%, 18.6%, and 3.5%, respectively, since the start of this year.
Coca-Cola stock has underperformed the S&P 500 Index (SPX-Index), which has risen 2.2% on a YTD basis as of February 16. In 2017, Coca-Cola stock was up 10.7%, lagging the S&P Index, which rose 19.4%. Coca-Cola has been unable to boost its volumes, in particular, soda beverage volumes. Changing consumer preferences towards healthier beverages are impacting the performance of soda companies.
On February 15, Coca-Cola announced a hike in its dividend, marking the 56th consecutive rise in its annual dividend. The company announced an increase of 5.4% in its annual dividend to $1.56 per share. The company plans to return $6.7 billion in dividends and about $1 billion in net share repurchases to shareholders in 2018. In 2017, the company returned $6.3 billion in dividends and about $2.0 billion through net share repurchases.
This series on Coca-Cola’s fourth-quarter results will discuss how the company’s earnings improved in 4Q17 despite lower revenue. The series will also discuss in detail the company’s revenue, volume, and margin performance in 4Q17 and full-year 2017. The last part of this series will focus on the revision in analysts’ price target for Coca-Cola stock following the fourth quarter results.