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The Coca-Cola Company Message Board

  • canucanoe1 canucanoe1 Jun 24, 2008 10:39 AM Flag

    KO today

    Most people don't understand KO and its financial structure. KO has distinct exposure to fuel, plastic, sugar, aluminum, corn, etc. cost increases. It is just as responsible as its bottlers to make sure the end product sells through. One can't ignore this, but there's more.

    For the past decade, KO has dodged the bullet with its deteriorating performance. For example, no new products of any consequence, bottlers with too tight margins, etc. etc. They have dodged the bullet because:

    a. they milked the tax code and reduced taxes.

    b. currency swung they way, but recognize KO doesn't even get a full currency benefit (they derive translational advantages, but not transactional bennies)

    c. The above bennies appear not just in KO's balance sheet, but also on the bottlers. Therefore, when analyzing KO's "bottler income", a separate line, this too derived the leverage, the steroids, of non operational currency and tax reductions make the bottlers appear more healthy than they are. Consider that CCE has derived these benefits, and maintained their "earnings", while volume is flat or declining. This is a sign of decay that is not fully reflected in KO's earnings report.


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    • Re: pull up a chart where you can trace the PE..and you'll see it!!

      Yo spliter... that's a good suggestion for those blind KOheads. But I think you should have suggested something in braille that they could feel instead. Everybody knows they can't see a thing. How about an audio by someone who they admire. Naaah I don't Warren does audio's. Besides, he isn't one of the people that's doing anything for THEM. He marches to a completely drummer. But don't tell them... they never hear... see... speak... anything they don't want to. Let's just ask what they want done with their ashes.

    • Re: That is a company that I will take risk with any day of the week.

      yo cyber... just don't take your risk on Friday. That's the worst day of the week to be left holding that empty KO bag.

    • KO >>>>>running up into 2000 high (or what ever year it was)..say for 5 yrs or so...the PE kept rising.....and the result was the stock price kept rising...ever since the PE peaked and started falling...the stock price has been falling as well.

      >> pull up a chart where you can trace the PE..and you'll see it!!

    • cyberjitsu, EPS has improved, but the trends that enhanced earnings are now swinging the other way:

      As for PE, that is a treacherous subject. The last time KO's PE contracted from bubble levels, the PE hit 8 (about when Buffett bought).

    • cyber, that's opinion, a mixture of lookback and dreaming. State some facts.

    • cyberjitsu, so how do you explain the past 10 years performance of the KO stock price? Pls know that I forecast this past performance, using the same modeling and insight that I presented yesterday. Some of yesterday's thoughts are new, and yes, continue my negative opinion of KO stock price. I see nothing much to be positive now, as currency and tax rate reductions will play little role in the future, maybe even revert, negatively, to the long term mean trend. What are you specifically calling a positive that will affect the KO stock price?

    • k4pkg, One should not leave money to depreciate 40% over 10 years based on these perceived problems.

    • cyberjitsu, you seem to want to shoot the messenger. Re-read my post, think a bit, stick to facts, park your emotion.

    • George Soros' Theory of Reflexivity speaks to trends that reinforce each other. For KO, I would identify the following long term trends now in force:

      1. Health consciousness past transitional and now in full force.

      2. Tax reduction beneficial trend is over. Pendulum will swing the other way in the future.

      3. Currency. Tough to say, but I will go out on a limb and say this will be flat to negative in the future, whereas the past 4 years it was highly positive.

      4. Because of the above, bottler income on KO's books will trend negative.

      5. Plastic, Alum, corn syrup, sugar, fuel, etc. will remain expensive and cause rationalization of volume delivery. Because of #1, price increases will be constrained as alternative beverages will be competitive.

      6. Water consumption from bottles will trend negative.

      7. Govts will trend to recyclable packaging by imposing return fees.

      8. Employee costs will start soaring at the bottlers as employees play catch up. Further rationalization of delivery routes and marginal customers will take place and hit KO volumes.

      9. KO has lost good talent and it shows. It can't even buy companies and expand its business! This will continue. Its business model is broken.

      This consumer stock is going to hit a rough patch. It's delivery system and product has been hollowed out through worship at the Wall Street alter. For 10 years, it has lost sight of the future. KO maybe to the next decade what Eastman Kodak was to the past 2 decades.

      • 2 Replies to canucanoe1
      • Yo canucanoe... that's an excellent article on KO. The KOheads aren't going to like it, because it's not what they want to hear. Economic facts that translate to weaker fundamentals are never a consideration. They'll take the word of TV pundits who are paid to ignore the bad news, and keep telling people everything's going to be wonderful. The best I think they can hope for, is that when KO gets to whatever Mr. Buffett finds it interesting enough for his liking... maybe he'll make them an offer. But the company will have to be much lower in price and willing to make significant concessions to a vulture like Warren Buffett. That would be such a shock to the KOheads that they may be faced with decisions that could cause a lot of KOheads to try skydiving without a parachute!

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