Monday, February 8, 2010

The Coca-Cola Company (NYSE: KO): Q4 Earnings Preview 2009

. Monday, February 8, 2010

By Stock Wizard

The Coca-Cola Company (NYSE: KO), the world's largest beverage company, is scheduled to release its fiscal fourth-quarter 2009 financial results before the market open on Tuesday, February 9, 2009. Analysts, on average, expect the company to report earnings of 67 cents a share on revenue of $7.21 billion. In the year ago period, the company posted earnings of 64 per share on revenue of $7.13 billion.

The Coca-Cola Company manufactures, distributes, and markets nonalcoholic beverage concentrates and syrups worldwide. It principally offers sparkling and still beverages.

In the preceding third quarter, the Atlanta, Georgia-based company reported net income that was flat with the prior-year quarter at $1.90 billion or $0.81 per share. Excluding these charges and gains, non-GAAP net income for the quarter edged down to $1.92 billion or $0.82 per share from $1.93 billion or $0.83 per share in the year-ago quarter. Net operating revenues for the quarter declined 4% to $8.04 billion from $8.39 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of $0.82 per share on revenue of $8.11 billion. Gross profit for the quarter decreased 5% to $5.11 billion from the year-earlier quarter, and selling, general and administrative expenses were $2.91 billion, 7% lower than the third quarter of 2008.

Worldwide unit case volumes increased 2% in the third quarter, driven by a 4% increase in international unit case volumes. Unit case volume growth increased strongly in key emerging markets with 37% growth in India, 15% growth in China and 3% growth in Brazil.

In November, the beverages company said its productivity initiatives remain well on track to achieve $500 million target in annualized savings by year-end 2011, and expects to deliver more than half of the savings by the end of 2009.

Coca-Cola is expanding agressively in international market, especially emerging markets, to improve revenue growth. The soft drinks maker is planning to more than double its number of bottling plants in China over the coming decade as part of the group's aim to triple the size of its sales to the country's rapidly emerging middle class. Coca-Cola executives say they expect 60 per cent of the new growth to come from China, India and other emerging markets, with only 15 per cent from developed markets. China, already Coca-Cola's third-largest national market by revenues, has an average per capita consumption of 28 Coca-Cola products per year -- on a par with poor African countries and well below the 199 per capita of Coca-Cola products drunk last year in Brazil.

The company's stock currently trades at a forward P/E (fye 31-Dec-10) of 15.57 and PEG Ratio (5 yr expected) of 1.93. In terms of stock performance, Coca-Cola shares have gained 25 percent over the past year.

Full Disclosure: None.

Disclosure: Author does not own any of the stocks discussed here.

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