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Coca Cola Financial Analysis

1394 words - 6 pages

Assignment #1: Coca-Cola Company
Financial Results Analysis: Q3 2012

ACC499/Accounting Capstone
Coca-Cola Company is a beverage company headquartered in the United States with significant international operations. Operating in over 200 countries worldwide with a product offering of over 500 different products, Coca-Cola Company has come a long way from a small beginning in 1886 (Coca-Cola, History, 2012). Long considered a strong corporate entity by investors and analysts, Coca-Cola recently released 2012 Q3 financial results and business targets on October 16, 2012 as discussed below.
North American Market Volume Results
North America is part ...view middle of the document...

Drivers of Profitability
Drivers of profitability for Coca-Cola Company include the ability to stimulate somewhat saturated markets such as North America while continuing to focus on increasing market share in emerging markets. North America has long been considered the flagship for Coca-Cola but as mentioned previously, recent concerns over obesity rates particularly in children and young adults in the United States has forced the spot light on sugary drinks as a contributing factor (Coca-Cola, Earnings, 2012). Coca-Cola has responded by changing packaging for some drinks, offering them in mini-can size for those concerned with portion control and continuing development of lower calorie alternatives such as natural, zero calorie sweeteners for Sprite and Fanta drinks. Coke Zero continues to hold stable as a leading diet soft drink in the market today (Choi, 2012).
As Coca-Cola plans for the future, it will have to continue to work with the identified drivers of profitability listed above as well as additional drivers. Despite the favorable market gains overall in 2012, unfavorable currency exchange rates between Europe and the U.S. deflated some of the percentage gains in the various markets resulting in a 5% profits decrease (Zacks, 2012). Coca-Cola Company enjoys world-wide brand recognition which will assist in gaining market share in those areas not already saturated with Coke products. Strong brand recognition and consumer loyalty also allows Coca-Cola Company to pass on (to some degree) increased commodity costs to consumers. Emerging markets will continue to increase Coca-Cola market share but the company will have to be watchful of trends developing in emerging markets similar to those in the United States as emerging markets evolve into developed, slower-growth markets.

Earnings Per Share Results
Coca-Cola Company presented $0.51 earnings per share amount for the third quarter and $1.56 earnings per share amount year-to-date for 2012. The year-to-date earnings per share represents a 2% increase overall but the Q3 rate is a decrease from Q2 and an increase from Q1 earnings per share numbers which were $0.61 and $0.45 respectively (Bloomberg, 2012). Analysts estimate that the Q4 earnings per share will be $0.43 rounding out 2012 with overall earnings per share amount of $2.00, an $0.08 increase from the 2011 earnings per share amount of $1.92 (Bloomberg, 2012). Note that Coca-Cola had a two-for-one stock split in July 2012 and this is reflected in the earnings per share reporting (Zacks, 2012).
Long term growth targets for Coca-Cola continue to estimate moderate growth increases in developed markets spurred by consumer loyalty to sparkling beverages with increased consumption of new/differentiated still beverage offerings. Moderate to significant growth increases are expected in emerging markets as Coca-Cola invests more heavily in those areas in an effort to dominate those markets with...

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