Please ensure Javascript is enabled for purposes of website accessibility

Coca-Cola and Panera Fall on Weak Guidance

By Jeremy Bowman - Feb 18, 2014 at 9:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The blue chips ended relatively flat as Coca-Cola and Panera both disappointed the market with poor outlooks for the year ahead.

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Investors returned from the long weekend to a sleepy opening to the week as stocks finished relatively flat today. The Dow Jones Industrial Average (^DJI 0.00%) closed down 24 points or 0.2%, while the S&P 500 inched up just 0.1% as the market reacted to more news on mergers and a poor housing report. At the top of the deal board was Actavis, which shelled $25 billion to by Forest Laboratories, sending the target up 27.5%. Meanwhile, the National Association of Home Builders' index fell 10 points to 46, well below expectations of 56. A drop like that might normally send stocks tumbling, but the association pointed the finger at bad weather, which has been the blame for much of the poor economic data we've seen lately.

Bringing down consumer-goods stocks today was Coca-Cola (KO 0.52%), which fell 3.8% after reporting earnings this morning. Coke's woes at home continued as North American volume sales fell 1% in the quarter on a 3% drop in sparkling beverage. The beverage giant also came up short on sales, posting revenue of $11.04 billion on expectations of $11.31 billion. Adjusted earnings increased a penny, in line with estimates at $0.46, but management also warned about the year ahead saying foreign currency headwinds would take a big bite out of profits, projecting a 7% drop in 2014 operating income because of changing rates. Given those issues and the continuing decline in soda consumption domestically, we could see more painful reports for Coke in coming quarters.

After hours, shares of Panera Bread (PNRA) were falling as well, down 2% after a 2.8% drop in the regular session. The bakery/cafe chain actually beat earnings estimates in the quarter past, posting a per-share profit of $1.96, ahead of the consensus at $1.94. Revenue was in line with estimates, coming in at $661.7 million on 15.8% growth as comparable sales improved 1.7%. However, the outlook for the current quarter was not as strong as the company said same-store sales had fallen 2.2%, citing the weather, and said it now expected EPS of just $1.49-$1.55, below estimates of $1.70. Full-year guidance was also below expectations at $6.80-$7.05 as the company plans make "investments in its strategic plan." Top-line growth and store expansion plans still look solid for Panera, but with waning same-store sales the stock's days of crushing the market may be over.

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Coca-Cola and Panera Bread. 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,980.32 (0.00%) $0.00
The Coca-Cola Company Stock Quote
The Coca-Cola Company
KO
$65.22 (0.52%) $0.34
Panera Bread Company Stock Quote
Panera Bread Company
PNRA

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
394%
 
S&P 500 Returns
127%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.