Wednesday, July 17, 2013

Earnings Results Review: KO & JNJ

Here I am to share the results from two stocks in my portfolio. Please note that 2nd quarter earnings for the following companies came out yesterday (07/16/13):

Johnson & Johnson (JNJ)

Coca Cola (KO)

Ive held Coke for several years and JNJ is a fairly new acquisition to my portfolio. I just quickly want to point out that those stocks were purchased for the long term. Both are very solid companies with strong financials that have been around FOREVER. Coca cola’s sole major competition is Pepsi meanwhile JNJ makes products that we need no matter what is going on in the world. Hence, those are just a couple of the reasons why I made a decision to purchase shares in those companies and why I plan to be with them for the long term. 

Another huge plus is that they both pay dividends. Meaning, I get cash from them every 3 months. The money I receive is based on the amount of shares I hold. Coca Cola pays 0.28 per share every 3 months while JNJ pays 0.66 cents (source: The more shares you have, the more you get in dividends. But anyway, I will talk more in length about dividends in a future post. It is something I want to talk about in length because its quite amazing. So stay tuned!

For now here is the low down on KO and JNJ:


 News from management was not that great. Second quarter profit fell by 4% due to weak volume growth. Shares were down about 2% the morning of the earnings announcement (usually a great time to buy if you plan to increase your position in a particular stock which you plan to hold long term). The interesting part about the earnings announcement is that they blamed their "not so great" quarter on the weather. Please keep in mind that Coke is an international company (meaning it sells worldwide!) apparently there was a lot of rain and not enough heat around certain parts of the universe and hence this had an effect on the bottom line at the end of the quarter. At the end of the day-- I am still holding KO and a bad quarter does not make me want to sell by any means. I didnt buy any new shares this time around and I am just maintaining a HOLD on my current shares. I may increase my position at another time when the opportunity presents itself again.

As I write this, the stock is trading at $40.87 (Already more than $1 increase since the earnings were announced) a stock like this is golden in my book. This just come to show you that a not so good quarter is really nothing to worry about when it comes to a company like Coca Cola. 


Management on this stock came with amazing news! Just some of the highlights:
  • Second quarter revenue came in at $17.9 billion-- up 8.5% in comparison to the second quarter of 2012.
  • Sales beat analyst expectations by .2 billion!
  • Net earnings for the quarter came at $3.8 billion 
  • Revenue is up 32% over one year which is quite significant.
Current stock price: $90.23 per share.

For more highlights on JNJ's earning's results click here. (Note: The Motley Fool website is one of my tools when I am researching updates on my stocks and a great resource).
Goes without saying that JNJ is doing pretty well. The bottom line is that JNJ is a diverse company with multiple divisions and they are a leader in sales of items that every household needs from moisturizer to advil!! Another factor that's added in to these favorable earnings is the fact that they havent had any recalls on their products in a while!! Keep up the great work JNJ!.

I will remain steady with my positions in both companies. I haven't purchased any new shares recently but may consider it in the future in order to continue strengthening my position in both companies which are part of my value portfolio.
Disclosure: I currently hold positions in both, JNJ & KO.