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The euro dropped to its lowest level in over a year as higher inflation data fueled expectations that the Federal Reserve will raise interest rates in December. When the dollar gets stronger, it creates a headwind for companies that do most of their business abroad.
This matters for the beverage giant because it earns a huge portion of its profit in foreign markets. When those local currencies weaken against the dollar, the money the company brings home from selling soda in Europe and elsewhere shrinks on paper, even if the actual business is performing well.
Source: WSJ
Heartland Coca-Cola Bottling announced that Jeff Carter will become its new president. Chuck Wyant will remain in his role as the company's chief operating officer. This is a routine leadership change at one of the many regional partners that handle the physical bottling and delivery of the company's drinks.
Source: Business Wire
After Coca-Cola reported its October results, we updated our fair value. We lowered our quality score to 3.7 after we cut our rating for the people running the business and how fast its sales grow. We changed our rating from Buy to Watch and raised our profit projections for the next five years. We added three things to what we track: the potential sale of the Costa Coffee chain, the possible public listing of the Indian bottling business, and the use of automated machines to sell customized sodas.
UBS raised its price target from $104 to $106 after the beverage giant reported sales that topped expectations. This move follows a week where several other firms also lifted their targets, bringing the average analyst target to about $98. While the stock is trading at a higher price relative to its earnings than its five-year average, analysts are increasingly optimistic about its ability to raise prices without losing customers. This pricing power, combined with growth in emerging markets, is helping the company grow earnings even as it faces a large ongoing tax dispute with the IRS.
Source: UBS
Coca-Cola brought in $13.4 billion in revenue this quarter, which was higher than the $12.9 billion analysts expected. The company earned $0.91 per share, also beating expectations. This growth was driven by a 5 percent increase in the total volume of drinks sold and a 7 percent rise in organic revenue, a measure that strips out the impact of currency swings and business sales.
The company is successfully becoming more profitable by shifting away from heavy manufacturing toward licensing its brands to independent bottlers. Its operating margin, which shows how much profit is left from each dollar of sales after paying for production and marketing, rose to 33.4 percent. Management raised its financial goals for the full year, signaling that the business is managing to grow even as it navigates a complex global market.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Management has a perfect record of clearing their own targets by a few cents every quarter, showing they have a tight grip on their global costs and pricing.
| Expectation | |
|---|---|
| EPS | $0.60 |
| Revenue | $11.29B |