Stocks opened lower Thursday after a government retail sales report for December suggested that holiday sales were weaker than observers had previously thought. The Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) fell sharply in the morning but recovered somewhat.
Today's stock market
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Consumer stocks led the market lower; the Consumer Staples Select Sector SPDR ETF (NYSEMKT:XLP) fell 1.1%. Drugs stocks continued recent strength, with the SPDR S&P Pharmaceuticals ETF (NYSEMKT:XPH) gaining 0.9%.
Steady enterprise spending boosts Cisco
Cisco Systems reported fiscal second-quarter results that beat expectations, offered a strong outlook for next quarter, and raised the dividend, sending shares higher by 1.9%. Revenue was $12.45 billion, up 6.9% from the period last year when excluding the contribution of a divested business. Non-GAAP earnings per share increased 15.9% to $0.73. Analysts were expecting Cisco to earn $0.72 per share on revenue of $12.41 billion.
Strong growth in subscriptions pushed their proportion of total revenue to 65% from 54% in the period a year earlier. Adjusted operational cash flow increased 12%.
Going forward, Cisco forecast revenue growth next quarter of 4% to 6%, compared with the analyst consensus of 3% growth. Analysts have been expecting Q3 EPS of $0.76, but the company guided to $0.76 to $0.78.
CEO Chuck Robbins said on the conference call that the company saw steady demand from enterprise customers throughout the quarter despite geopolitical uncertainties, and that he is confident that Cisco is competitive in China. Those comments, plus a 6% increase in the dividend and authorization for an additional $15 billion in share buybacks, had investors cheering the stock today.
Coca-Cola sees profits going flat in 2019
Coca-Cola met expectations for fourth-quarter results, but a forecast for slowing growth in 2019 took all the fizz out of the stock, and shares tumbled 8.4%. Revenue fell 6% to $7.06 billion, but organic revenue, subtracting the effects of currency and one-time events, grew 5%. Non-GAAP earnings per share increased 9% to $0.43.
Unit case volume was flat for the quarter, with sparkling soft drinks declining 1%; juice, dairy, and plant-based beverages falling 2%; water, enhanced water, and sports drinks growing 1%; and tea and coffee expanding 3%. Non-GAAP currency-neutral operating income grew 8%.
The results were adequate, but guidance for the year was disappointing. Coke sees organic revenue growth slowing to 4% and non-GAAP EPS between 1% higher and 1% lower than this year's $2.08. Analysts were expecting EPS of $2.22.