Why Coca-Cola Slipped and Apple Was Steady After Earnings

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. 

Leaked: Apple's next smart device (warning -- it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee that its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are even claiming that its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts that 485 million of these devices will be sold per year. But one small company makes this gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and to see Apple's newest smart gizmo, just click here!


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3039880, ~/Articles/ArticleHandler.aspx, 12/21/2014 7:14:38 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement