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Coca-Cola slides despite raising its full-year profit outlook
Coca-Cola shares slid on Tuesday even though the beverage maker beat profit and revenue estimates and raised its outlook. The company warned that pressure on consumers could last into next year.
Quick Read
- Coca-Cola shares slid 1.6% on Tuesday while the S&P 500 rose.
- The company beat third-quarter profit and revenue estimates and raised its full-year earnings outlook.
- Its warning that consumer pressure could last into next year may have outweighed the strong results.
- September household spending figures are due on Oct. 29 at 8:30 a.m.
Why did Coca-Cola shares fall?
Coca-Cola (NYSE: KO) shares slid 1.6% on Tuesday to close at $91.18. The drop came on the same day the company beat analysts' estimates and raised its full-year outlook. The company lost $6.5 billion in stock market value.
Why it matters: The broader market went the other way. The S&P 500 rose 0.6%. The consumer staples sector fund fell 0.9%. That fund tracks makers of everyday goods.
The company warned that pressure on consumers could last into next year. That caution may have weighed on the shares more than the strong quarter lifted them.
What did Coca-Cola report?
Coca-Cola's adjusted profit per share and its revenue for the third quarter both came in above the consensus, the average analyst forecast. Sales volumes grew, led by India, China, Mexico and Brazil, the company said. Coca-Cola Zero Sugar was a standout brand.
Operating margin, the profit the core business keeps from each dollar of sales, widened from a year earlier, the company reported. Higher marketing spending offset part of that gain. Volume in North America was flat.
The company also raised its guidance, its own forecast, for full-year earnings per share. Earnings per share is the company's profit divided by its number of shares.
What could come next for the stock?
What’s next: The higher outlook and the consumer warning point in different directions. The company expects stronger profit this year, yet sees shoppers under strain for longer. Shareholders may weigh which signal matters more.
The shares closed 4.4% below their 52-week high of $95.34. That high is the top price the stock reached over the past year.
A fresh read on household spending is due on Oct. 29 at 8:30 a.m., when September personal income and spending figures are published.
For readers
What it could mean for you: People who own Coca-Cola shares directly feel this news in full, with no other holdings to offset it. The tension between a higher profit forecast and a warning about strained consumers could shape how the stock trades in the months ahead. If household spending data show shoppers holding up, the warning may carry less weight. If spending weakens, the company's caution could matter more. Owners of broad index funds hold Coca-Cola too, but only as a small slice of a much larger mix.
Questions and answers
Why did Coca-Cola stock go down after earnings?
The shares slid 1.6% even though results beat estimates. The company warned that pressure on consumers could last into next year, and that caution may have weighed on the stock.
Did Coca-Cola raise its guidance?
Yes. Coca-Cola raised its full-year forecast for earnings per share alongside its third-quarter results. It also warned that pressure on consumers could last into next year.
Where did Coca-Cola's growth come from?
The company said volume growth was led by India, China, Mexico and Brazil, with Coca-Cola Zero Sugar a standout brand. Volume in North America was flat.
The numbers
| Coca-Cola (KO) price | $91.18 |
|---|---|
| Coca-Cola (KO) change | −1.64% |
| Coca-Cola (KO) market value | $390 billion |
| Coca-Cola (KO) 52-week high | $95.34 |
| S&P 500 change | +0.60% |
| 10-year Treasury yield | 4.99% |
Tuesday’s close
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