Is Coca-Cola really overdone?

By Emerging Money>,

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Coca-Cola ( KO , quote ) is being punished after reporting earnings today as analysts were looking for higher revenue.

Image courtesy Doug Wilson: But have the analysts got this right?

Coca-Cola's net income came in at $0.41 per share or $1.9 billion, compared to the previous year of $0.39 per share or $1.8 billion.   Excluding one-off items, Coca-Cola earned $0.45 per share, beating analysts' expectations of $0.44 per share.

So why the sell off if Coca-Cola beat estimates by a penny?

After digging into the earnings report, the big difference between Coca-Cola's planned growth versus analyst expectations in a couple of key metrics that stands out in my view, are case volumes and bottle sales.

Comparing actual case volumes to many analysts' expectations they appear to be on the lighter side of expectations. However, when looking at the company's planned growth targets, case volume was inline at 3%. Analysts were looking for 3.6% even though the company set expectations of between 3% to 4%.

The other big 'miss' was in bottling, where the company grew by 5% versus expectations of 10%. Again there seems to be a disconnect between company guidance versus analysts'. It seems that Coca-Cola set clear targets and goals, but expectations were set beyond this by the market.

Coca-Cola is seeing great growth beyond North America in emerging markets, with sales in Asia and Africa jumping by 5%, and income growing by 18%.

In the Pacific Coca-Cola saw a decline of 1% in sales but grew income by 11%. In Latin America, another growth area, sales jumped by 8% and income by 10%.

Coca-Cola did well domestically as well, with sales increasing by 6% and income jumping by 12%.

In Europe Coca-Cola saw significant headwinds in sales, which fell by 6% as the company faced weakening consumer confidence along with the necessity of aggressively discounting products. Not unexpected given the turmoil in the euro zone, it appears the company is trying to manage the turmoil and limit exposure.

For 2012 Coca-Cola earned $2.01 per share, or $9.2 billion on $48.03 billion in sales. This is an increase in revenue from the previous years of $1.92 per share, or $8.9 billion on $46.55 billion in sales.

Coca-Cola has now met or exceeded the company's guidance and target plans for three years in a row, and  has done so in a very volatile global market, and despite the euro zone crisis.

Bottom line:  This pull-back after earnings could be a good opportunity to stick a toe in the water with a company that continues to show growth not only domestically but in all the key emerging markets.

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

This article appears in: Investing , Stocks
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