Why Coca-Cola Slipped and Apple Was Steady After Earnings

The blue chips despite Coca-Cola shedding 3% on an uninspiring earnings report. Meanwhile, Apple delivered mixed earnings and shares were little changed.

Jul 22, 2014 at 10:00PM

Stocks rose today, lifted by earnings reports, economic data, and signs of cooperation from pro-Russian separatists in Ukraine, and the S&P 500 touched an intraday trading high. By the closing bell, the Dow Jones Industrial Average (DJINDICES:^DJI) had gained 61 points ro 0.4%. The S&P added on 0.5%, and the Nasdaq jumped 0.7%. 

In the day's economic reports, existing home sales for June clocked in slightly higher than expected at an annual rate of 5.04 million, its strongest clip since October and above May's total of 4.91 million. Investors have become suspicious of the housing recovery after some recent underwhelming data and weak reports from home improvement retailers, but today's news seems to indicate that home-buying is on the mend, and may soon reach 2013 levels. Elsewhere, the Consumer Price Index showed that inflation remains under control, rising 0.3%, while core CPI, which strips out the volatile food and gas segments, increased by just 0.1%. 


Coca-Cola (NYSE:KO) was among today's losers, as its stock fell 2.9% after the beverage giant's results came in below expectations. Sales of Diet Coke fell and overall volume in North America, its biggest market, was flat. Around the globe, volume sales were up 3%. Because of currency translation, revenue fell 1% in the quarter to $12.57 billion, below estimates of $12.83, though sales would have increased 3% adjusting for currency effects. On the bottom line, its profit of $0.64 per share beat estimates by a penny. While Coca-Cola will to be a cash cow for years to come, it seems like the company will be only be more challenged  to scratch out growth as soda consumption has fades in developed countries due to health concerns. Share buybacks will help inflate its EPS and its 2.9% dividend yield is a bonus, but investors looking for meaningful growth will probably have more success elsewhere.

After hours, Apple (NASDAQ:AAPL) turned in mixed results, beating earnings estimates but falling short on sales. The biggest company in the country based on market cap said revenue grew 5.9% in the quarter to $37.4 billion, missing the experts' view at $38 billion. The increase in sales was mainly driven by a 12.7% jump in iPhone sales, in large part because of its deal with China Mobile earlier this year, as sales soared 48% in China. Increasing Mac sales also contributed to the growth. In recent quarters, Apple had beaten sales estimates but fallen short on profits, but today was the opposite, as the company delivered a per-share profit of $1.28, up from $1.07 a year ago and ahead of expectations of $1.23 as gross margin improved to 39.4% from 36.9% a year ago. Looking ahead, Apple's guidance for the current quarter was on the weak side, projecting revenue of $37 billion to $40 billion, below estimates at $40.5 billion, while gross margin is expected to fall sequentially to 37%-38%. The company is widely expected to release the iPhone 6, the latest update to the franchise, in September and perhaps an "iWatch" later in the year. Today's report solidifies the tech giant as a mature company, but one that is capable of growing steadily and assured of generating huge cash flows. Its upcoming devices, however, should be the key to its results over the next few quarters. Shares were essentially flat in after-hours trading. 

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Jeremy Bowman owns shares of Apple. The Motley Fool recommends Apple and Coca-Cola, owns shares of Apple, and has options on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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