Coke Went Flat as the Dow Fell Slightly

Mark off today as yet another day during which bulls and bears fought a game of tug-of-war to a near draw. After overcoming early fears about global economic sluggishness, the latest big buyout announcement gave investors some of their optimism back. By the close, the Dow Jones Industrials (DJINDICES: ^DJI  ) had cut their losses to just 10 points, while the S&P and Nasdaq actually gained on the day.

Coca-Cola (NYSE: KO  ) didn't manage to recover much from its lows of the day, falling about 1%. After somewhat lackluster earnings earlier in the week, Coke got the bad news today that rival PepsiCo (NYSE: PEP  ) managed to top analyst estimates in its quarterly report. Although Pepsi's revenue fell slightly from the year-ago quarter, net income jumped 17%, as the company got good returns on its investment in advertising and marketing initiatives to differentiate its beverage and snack brands from its competitors. For Coca-Cola, the news means that it will have to redouble its efforts to maintain its No. 1 brand presence, and seek new avenues for growth. PepsiCo stock rose 1%.

Elsewhere, Windstream (NASDAQ: WIN  ) dropped 7%. Rival CenturyLink made a surprise dividend cut, along with posting weak guidance in its quarterly report. The move slashed more than 25% off CenturyLink's quarterly payout, and 22% off its stock, and sent ripples throughout the rural telecom space. With so many investors in Windstream, CenturyLink, and other telecoms seeking high dividend yields, the threat that payouts could fall could lead to a wholesale exodus from the space.

Finally, UIta Salon (NASDAQ: ULTA  ) dropped nearly 12%, after CEO Chuck Rubin unexpectedly resigned to head up privately held Michaels Stores. Despite announcing that same-store sales rose 8% on a 30% jump in revenue for the fourth-quarter, Ulta has made investors nervous, with Rubin's departure following CFO Bruce Hartman's resignation in October.

Will Coke lose the Pepsi challenge?
There is absolutely no question that Coca-Cola has been great to long-term shareholders, but today's news confirms the new threats to its continued market dominance. We've recently compiled a premium research report containing everything you need to know about Coca-Cola. If you own or are considering owning shares in the company, you'll want to click here now and get started!


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  • Report this Comment On February 15, 2013, at 8:49 AM, bestwaytoriches wrote:

    Dan,

    Can you see these over pumped over valued companies Ulta and CTL and Gnrc are getting rebalanced. I'm sure there will be more connect the dots Crammer has a record of pushing and pushing and then blow up. I prefer to go with value and growth play coming off the bottom RAD $ 1.58. Look at price to sales valuation RAD .05 to it's peers WAG , CVS ESRX all in the range of .50 RAD is 1/10th of it's competition. Another reason RAD is a stronger investment RAD is coming off multi yr lows and not becoming profitable. Based on new trends RAD is closing under preform stores refinancing debt and returning to profitability. In turn RAD has raised guidance twice an analyst have moved to more favorable ratings. Most professional money managers prediction for 2013 that RAD is a triple off it's lows with a price target $ 3.20. RAD is still on the radar for take over with all it's debt. and based on the low price of $ 1.58 RAD would be a great score. RAD currently expenses 500 million yearly on it's debt with rates as low as they are most of these cost can be brought to the bottom line with better financing. I anther good sign cramer is not backing RAD.

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