Coca-Cola Non-GAAP EPS of $0.70 beats by $0.03, revenue of $11.3B beats by $730M
06:58 AM | The Coca-Cola Company (KO) | By: Niloofer Shaikh, SA News Editor
Coca-Cola press release (NYSE:KO): Q2 Non-GAAP EPS of $0.70 beats by $0.03.
Revenue of $11.3B (+11.9% Y/Y) beats by $730M.
Shares -0.06% PM.
Global unit case volume grew 8%.
FY2022 Outlook: The company expects to deliver organic revenue (non-GAAP) growth of 12% to 13%; Comparable currency neutral EPS (non-GAAP) growth of 14% to 15% and comparable EPS (non-GAAP) growth of 5% to 6%, versus $2.32 in 2021.
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FY2022 Outlook: The company expects to deliver organic revenue (non-GAAP) growth of 12% to 13%;
Comparable currency neutral EPS (non-GAAP) growth of 14% to 15% and comparable EPS (non-GAAP) growth of 5% to 6%, versus $2.32 in 2021.
Leaving aside the appropriateness of their “comparable” earnings metric, let’s say for the sake of argument they net $2.50 this year, a bit higher than the consensus.
That’s lower in real terms than a decade ago, even after the slight EPS tail wind from buybacks.
In round numbers, the only progress has been the average dividend yield of 3.1%. It’s a bond.
To compare it with a random alternative, JPM pays a higher yield and also seems capable of getting the value of a share to rise over time.
Their cyclically adjusted EPS figure is up maybe inflation + 8% in the same stretch.
Admittedly Coke is hit by the rising US dollar worst than almost any other big US company.
Given the slow pace of value generation, Coke shares are arguably more useful as a dollar hedge than as an investment per se : )
I can see why Berkshire doesn’t sell the position.
Nobody likes paying taxes, and it’s not as if cash is in short supply. Faint praise.
Jim
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Do not ignore the bottling asset sales
What does it do to earnings and ROIC?
Do not ignore the bottling asset sales
What does it do to earnings and ROIC?
It will certainly mess with metrics like book, ROE, and ROIC, and debt.
It might mess up earnings for the year that it happened.
But longer term? If it didn’t help earning power per share over time, it’s a non event in terms of value per share.
Maybe earnings are now higher or lower than they would otherwise have been, but we don’t live in that world.
In the grand sweep of history it’s invisible.
Jim
I think Jim drinks Pepsi
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Berkshire invested roughly $1 billion in KO in 1988 or so…and now receives $704,000,000 every year (and growing) in dividends.
There are worse things in life.
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The true power of long-term investing, increasing dividends. You don’t need a great business at the long tail, even a good business morphing into an average business can still do wonders to your original investments.
You can substitute company with Index too, it still holds true.
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I think Jim drinks Pepsi
Traditionally I was pure Coke fella.
With rum.
But that’s as a consumer.
Often the worst companies to be invested in are the best companies to be a customer of, and vice versa.
As a client I used to be a huge fan of Amazon, but have never invested in it.
Uber clients are happy with Uber running at a loss to their benefit.
Who in the US loves their cable company? But the shareholders have done well.
After all, there are only so many dollars to go around in a given transaction, and the customers and shareholders are in competition for them.
Jim
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Berkshire invested roughly $1 billion in KO in 1988 or so…and now receives $704,000,000 every year (and growing) in dividends.
There are worse things in life.
Sure. But that was a third of a century ago.
Imagine that (say) 10 or 22 years ago, or whenever, Berkshire had sold the stock, paid the capital gains tax, and invested the net proceeds elsewhere.
Or late 2019–after the capital gains tax dropped, and during exuberant valuation.
Maybe that money could have been ploughed into Berkshire shares, more likely into something else.
How many other choices that Berkshire might have made would have left Berkshire shareholders worse off than having sat pat?
Few, I’d suggest.
Even if the selection had been made with a dartboard.
Other than start dates around 2005-2007, and even with very high current valuations,
Coke stock has underperformed the average S&P 500 stock for almost every time frame longer than a couple of years going back 20+ years.
Probably much longer but I don’t have the total return data handy.
I will make a bold prediction: after Mr Buffett leaves the building for the last time, the position will be liquidated the next time the valuation level is exuberant.
Even if the cash pile is huge at that time.
Note, I’m not necessarily saying that’s the right decision.
Usually when I disagree with Mr Buffett he’s right and I’m wrong.
But it’s my prediction, because it seems the sensible, prudent, and obvious course of action to me.
Jim
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Often the worst companies to be invested in are the best companies to be a customer of, and vice versa.
The exception to that being Costco. One of the few companies that have rewarded customers, shareholders and employees alike. That too in an industry, discount retail, that has historically treated employees shabbily.
Never understood why Buffett didn’t buy a huge stake, esp. with Munger on the BOD.
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Never understood why Buffett didn’t buy a huge stake, esp. with Munger on the BOD.
Maybe the optics scared him, being privy to inside information and all…Like never buying into MSFT when he was best buds with Gates.
Joe
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I think Jim drinks Pepsi
When he could be drinking a Côtes du Rhône? Or if it is too early for that, a Citron Pressé?
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I will make a bold prediction: after Mr Buffett leaves the building for the last time, the position will be liquidated the next time the valuation level is exuberant. – Jim
Oh, okay. But why not put you money where your mouth is Jim?-)
https://longbets.org/bets/
Oh, okay. But why not put you money where your mouth is Jim? -)
Well, an opinion isn’t a bet, but what odds are you offering?
I’m a “margin of safety” guy when placing a wager : )
Jim
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Liquidating COKE would mean having to find a place to invest that cash… with virtually no signs of elephants for years… and considering that the gushes of cash are already a problem in placing - I think this is unlikely - unless a special dividend were to be declared…