Tag Archives: ko

Loving Coca-Cola, But What About Valuation? [Seeking Alpha]

The Coca-Cola Company (KO), with a market cap of $189.26B, is the world’s largest non-alcoholic beverage company. The Coca-Cola Company has one of the widest moats in the consumer beverage industry with its diversified brands and extensive distribution network. KO had reached a new 52 week high of $42.70 in the last trading day after reporting a better than expected Q1, 2013 profit on April 16, 2013.

Q1, 2013 Earnings

KO reported net income of $1.75B, or 39 cents per share, down from $2.05B, or 45 cents per share, a year earlier. Excluding one-time items, earnings were 46 cents per share, beating analysts’ average estimate of 45 cents.

Volume Growth

Worldwide sales volume grew 4 percent, but revenue slipped 1 percent to $11.04B, which was negatively impacted by currency exchange rate and the sales lost through the refranchising of some other bottler assets. KO’s global sparkling portfolio grew 3%, led by brand Coca-Cola (3% growth), Fanta (6% growth), and Sprite (5% growth). Two-thirds of global volume growth was contributed by sparkling brands. As for the still beverage, the global volume increased by 6% for the quarter with growth across most still beverage categories.

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Unleash The Growth, Monster Got It All

Monster Beverage (MNST), formerly Hansen Natural Corporation, has successfully emerged as the world’s second-largest energy drink company behind privately held Red Bull. Despite the recent gain, MNST is underperforming with 7.67% YTD as of April 11, 2013 compared with the NASDAQ with a 11.48% advance. Monster Beverage had been hampered by safety claims over its energy drinks in the past few months, but now it may be due for a very bullish run.

Gaining Market Share

According to a note from SunTrust, Nielsen data showed Monster Beverage made market share gains and accelerated its growth rate in March. Prior, Nielsen convenience store data also showed that the energy drink category was up 6% for the four weeks ended February 16, 2013, while MNST outpaced the group at +7.4% and resumed its share gains.

New Buyback

On April 8, 2013, MNST’ Board of Directors had authorized a new share repurchase program for the repurchase of up to $200 million of the company’s outstanding common stock. There was no availability remaining under the previously authorized $250 million share repurchase program. Based on the last closing price of $55.86 on April 11, 2013, up to 3.58 million shares can be repurchased. MNST currently has 165.55 million total shares outstanding.

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PepsiCo: $6.4 Billion Is Rewarding For Investors But At What Cost? [Seeking Alpha]

With the market trading at a multi-year high, it may be a good time for smart investors to review their holdings and perhaps take some profits. It is also a good time to review stocks with low beta and strong cash flow to reduce the volatility. PepsiCo (PEP) surfaces when it comes to strong cash flow and low beta. However, taking a deeper look, PepsiCo’s cash flow may not be cheap with current valuation.

Management Update

For 2012, PepsiCo delivered EPS directly on target. The capital spending was 4% of net revenue for 2012, below our target of 4.5%, a 20% reduction from 2011 CapEx investment level. Inventory days had decreased, and payables days had increased. Overall, the company had a healthy cash flow for 2012.

Increasing Operating Cash Flow

Excluding the pension and restructuring cash outflows, the management operating cash flow increased 20% or by more than $1.2B compared to 2011. This cash flow performance enabled the company to return $6.5B to PepsiCo shareholders through a combination of share repurchase and dividends, a 16% increase from 2011.

Enhancing Productivity

As for the productivity commitment, the management executed a comprehensive restructuring program and accelerated the company’s productivity efforts across the value chain. The organization is de-layered, and the efficiency is improved by reducing headcounts and rationalizing the supply chains to reduce costs and investment in fixed assets. As a result of these efforts, the company delivered in excess of $1B in productivity in 2012.

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2 Coca-Cola Upgrades: More Cash Pours In [Seeking Alpha]

The Coca-Cola Company (KO) and Coca Cola Hellenic Bottling Co (CCH), both with strong cash flow and steady growth, had received positive upgrades from analysts recently. Both stocks will be analyzed fundamentally and technically in this article. Investing strategies will also be presented.

The Coca-Cola Company

The Coca-Cola Company is the world’s largest beverage company and is the leading producer and marketer of soft drinks. KO was up 1.11% and closed at $39.02 on March 14, 2013. KO had been trading in the range of $34.89-$40.67 in the past 52 weeks. KO has a market cap of $173.90B with a very low beta of 0.51.

On March 14, 2013, Credit Agricole upgraded KO from underperform to outperform with a price target of $43.00 (from $40.00), and Bank of America had reaffirmed its current buy rating with a price target of $41 on KO. On March 13, 2013, Wells Fargo maintained an outperform rating on KO and raised its price target to $42.00-$44.00 (from $41.00-$43.00). Analyst Bonnie Herzog thinks the stock deserves a higher premium relative to peers. As quoted from Bonnie Herzog,

Based on KO’s current valuation, we believe the market is underestimating KO’s long-term growth opportunities and the power of its global bottling network. Therefore, we believe KO’s current valuation premium of only ~10% to its peers is too narrow and presents a good entry point for long-term investors.

Analysts currently have a mean target price of $42.23 and a median target price of $42.00 for KO. Analysts are estimating an EPS of $0.45 with revenue of $11.05B for the current quarter ending in March, 2013. For 2013, analysts are projecting an EPS of $2.14 with revenue of $49.02B, which is 2.10% higher than 2012.

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Coca-Cola: Powerade Countering Slow Demand In Europe [Seeking Alpha]

The Coca-Cola Company (KO) is the world’s largest non-alcoholic beverage company, which owns or licenses and markets more than 500 non-alcoholic beverage brands, including Coca-Cola, Diet Coke, Fanta, Sprite, Dasani, Powerade, and Minute Maid. The Coca-Cola Company has one of the widest moats in the consumer beverage industry with its diversified brands and extensive distribution network. Recent developments for KO will be updated in this article.

Q4, 2012 Earnings, Beating Profit and Missing Revenue

KO’s net income climbed to $1.87B, or 41 cents a share, for Q4, 2012. Excluding restructuring costs and other items, profit was 45 cents a share, compared with the 44 cents average of analysts’ estimates compiled by Bloomberg. KO’s revenue for Q4 rose 4 percent to $11.46B, missing analysts’ average estimate of $11.53B, according to Thomson Reuters I/B/E/S. Sales of non-carbonated drinks in North America such as Powerade helped counter lower demand in Europe. The global sales volume rose 3 percent, driven by international growth.

KO grew the worldwide volume by 3% in the quarter and 4% for the full year. The company met its long-term volume revenue and profit targets for the full year. KO is on the right track to doubling its systems’ revenues by 2020 to $200B.

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3 Large-Cap Defensive Stocks For Your Portfolio: Coca-Cola, Waste Management And Sysco [Seeking Alpha]

Three large-cap stocks with defensive nature will be presented in this article. The Coca-Cola Company (KO), Waste Management Inc. (WM) and Sysco Corporation (SYY) all have solid balance sheet and generate strong cash flow. These three companies can be reviewed to increase the dividend return and better withhold the potential market corrections as compared to other high beta stocks.

The Coca-Cola Company

The Coca-Cola Company is the world’s largest non-alcoholic beverage company, which owns or licenses and markets more than 500 non-alcoholic beverage brands, including Coca-Cola, Diet Coke, Fanta, Sprite, Dasani, Powerade and Minute Maid. KO has one of the widest moats in the consumer beverage industry, and the company is well positioned to take advantage of the strong international growth through its diversified brands and extensive distribution network. KO closed at $38.91 with 1.56% gain on February 7, 2013. KO had been trading in the range of $33.71-$40.67 in the past 52 weeks. KO has a low beta of 0.50. The current annual dividend yield is 2.62% for KO.

Upcoming Earnings

Analysts, on average, are expecting an EPS of $0.44 with revenue of $11.55B for the quarter ending in December, 2012. Analysts are also estimating an EPS of $2.00 with revenue of $48.14B for the fiscal 2012. In the last 4 quarters, KO had 1 positive surprise and 3 in-line results. KO is expected to announce the Q4, 2012 earnings on February 12, 2013 at 9:30AM.

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3 Large-Cap Stocks With Revenue Growth And Strong Free Cash Flow [Seeking Alpha]

The markets have been in a rally mode since the beginning of 2013. The S&P 500 closed above 1,500 for the first time in more than five years on January 25, 2013, as strong earnings continued to boost the index. Investors’ sentiment is very bullish, and the market is driven by extreme greed. Nonetheless, intelligent investors know that too much optimism may not be a good thing, as quoted from Warren Buffett, “Be fearful when everyone is greedy. Be greedy when everyone is fearful.” The central theme of this article is not to predict the market direction, but to review a list of high quality large-cap stocks that generate strong free cash flow while continuing to grow its revenue. So, when the tide turns, investors can still count on steady cash flows from these stocks with solid fundamentals.

Company Name (Ticker) Revenue, ttm Quarterly
Revenue Growth, ttm (yoy)
Levered Free Cash Flow, ttm Diluted
Forward Annual
Dividend Yield
Cisco Systems, Inc. (CSCO) $46.68B 5.50% $9.27B $1.55 2.60%
China Mobile Ltd. (CHL) $86.83B 6.60% $5.26B $4.97 3.50%
The Coca-Cola Company (KO) $47.60B 0.80% $6.42B $1.91 2.80%

Source: Yahoo Finance

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Top 2 Bullish Stocks On Friday: Pfizer And Coca-Cola [Seeking Alpha]

Friday’s market sentiment was driven by extreme greed with Fear & Greed Index at 89, which had increased from the previous closing of 86. As reported by CBOE, the total put/call ratio for Friday was 0.75. The index put/call ratio was 0.77, and the equity put/call ratio was 0.54. The CBOE volatility index (VIX) put/call ratio was 0.38. In the following, top stocks had been identified through our daily options scanning process, with the scanning criteria where the daily call volume ratio was above 2.00 (2x of the average call volume) with a call volume above 10,000.

Name (Ticker) Call Volume Average Call Volume Daily Volume Ratio
Pfizer Inc. (PFE) 34,018 16,585 2.05
The Coca-Cola Company (KO) 28,928 8,607 3.36

Source: Schaeffer’s Research

Unusual option activities can be an indicator or precursor of a major movement for the underlying stock. This article will try to identify the bullish factors for Pfizer Inc. and The Coca-Cola Company.

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