Challenges for Coca-Cola - Analyst Blog

By
A A A

On Mar 27, 2014, we issued an updated research report on T he Coca-Cola Company ( KO ).

On Feb 18, the beverage company reported another dull quarter, missing the Zacks Consensus Estimate for revenues and only managing to meet earnings expectation as the U.S. beverage sales slowed down.

Coca-Cola's fourth-quarter 2013 adjusted earnings of 46 cents per share grew 7% year over year as strong gross margin and lower taxes made up for soft revenues and higher marketing costs. Revenues declined 4% year over year due to soft global volumes.

Changing consumer preferences, increasing health consciousness, rising obesity concerns, possible new taxes on sugar-sweetened beverages and growing regulatory pressures are affecting sales of carbonated beverages of Coca-Cola as well as other soft drink makers, PepsiCo, Inc. ( PEP ) and Dr Pepper Snapple Group, Inc. ( DPS ). In fact, CSD category headwinds led to lower-than-expected volume performance at Coca-Cola in 2013. Overall, the company's revenues and profits in 2013 fell short of management's expectations.

Despite the 2013 headwinds, management aims to accelerate growth in 2014 - "the year of execution." In 2014, the company plans to accelerate growth of sparkling beverages, led by the Coca-Cola brand. The company has increased marketing investments and is driving package and product innovation to boost its sparkling beverage volumes. Moreover, the company will expand its still beverage portfolio and increase its brand building investments to enhance volume growth.

Coca-Cola enjoys sound long-term fundamentals with its global reach, strong brand power, expanding international presence, powerful global bottling network and solid cash position. Moreover, its increased focus on product/packaging innovation and marketing strategies bode well for additional market share gains.

Other Stocks to Consider

Coca-Cola carries a Zacks Rank #4 (Sell). A better-ranked beverage stock is Monster Beverage Corporation ( MNST ), carrying Zacks Rank #2 (Buy).



DR PEPPER SNAPL (DPS): Free Stock Analysis Report

COCA COLA CO (KO): Free Stock Analysis Report

MONSTER BEVERAG (MNST): Free Stock Analysis Report

PEPSICO INC (PEP): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: DPS , KO , MNST , PEP

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

57,375,820
  • $16.20 ▼ 0.80%
46,357,695
  • $102.13 ▲ 1.23%
39,856,106
  • $3.59 ▲ 0.84%
36,749,915
  • $19.21 ▲ 5.38%
35,094,671
  • $74.63 ▼ 1.75%
25,538,058
  • $48.06 ▼ 0.23%
24,241,250
  • $38.18 ▲ 1.03%
22,422,839
  • $11.20 ▲ 3.70%
As of 8/27/2014, 04:02 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com