Tuesday, July 22, 2014

Coca Cola Earnings Review & My Two Cents

Hello all! As earning season continues on its way-- Coca Cola announced 2nd quarter earnings today., 7/22/14,

Here are some of the highlights from the call:

The Good:
Global Unit case volume grew 3% during the second quarter and 2% year to date. International volume grew 3% while North American volume remained the same. Volume also accelerated in North America, Eurasia and Africa, Europe and Asia Pacific.
The Not so Good:
Reported net revenues were down 1% in the second quarter and 3% year to date.

Reported operating income was down 2% in the second quarter, and year to date.

Earnings per share for the quarter was reported at $0.58, which is down 1%

Cash flow from operations was at $4.5 billion, a significant increase from reported cash in quarter 1 which was at $1.1 billion.

My Two Cents:
Despite the “less than stellar” results for this quarter— Coke is one of those companies in my portfolio which I consider to be part of the “core”. In other words, despite of its “conservative” growth prospects I don’t see myself selling it any time in the near future (if ever). On the contrary, it is one of those in which I would purchase additional shares if we ever face a significant pull back in the price.

What’s not to love about coke? First of all, I don’t drink soda so that may come as a surprise. However, considering I am probably in the minority as a non-soda drinker, whether I like soda or not that has nothing to do with the profitability of this company. I bought coke back in December 2011 for a few main reasons: 1. Strong international brand with only one sole competitor 2. The company pays dividends (currently a nice $1.22 a share) 3. It’s one of Warren Buffet’s favorites. (my virtual investing mentor). 

Sometimes I wished I would have grabbed more shares at that price but I’m very happy with the returns it has provided me with over the years (nearly 47% return since time of purchase) and I am certain it will continue on that path, even if at a conservative level.

Has my original thesis of this company changed at all? Nope. And, with that said, I will remain a happy shareholder.

…and can we close with their oh-so-cool new marketing campaign of personalized bottles:

You can make your on at http://www.shareacoke.com/#bottle (How cool is that!!!)
Any questions, concerns, confused about anything on here? Feel free to email me at teachmetoinvest@gmail.com
Cheers to profits!