The Coca-Cola Company (KO) recently announced the pricing of senior notes worth $500 million due 2015, $1.25 billion notes due 2018 and $750 million notes due 2023 in an underwritten registered public offering. The bonds for $1.25 billion and $750 million were priced with a coupon of 1.15% and 2.50%, respectively and sold at par.
Coca-Cola intends to use a portion of the net proceeds to repurchase its outstanding 5.00% notes due 2013, 7.375% notes due 2014 and 4.25% notes due 2015. The rest of the net proceeds will be used for general corporate expenses.
Besides repurchasing notes, the company has been returning value to its shareholders by repurchasing shares. In addition, the company boasts a solid cash position by regularly paying dividends. In fact the board of directors of The Coca-Cola Company recently announced a 10% increase in the annual dividend. On the other hand, rival PepsiCo, Inc. (PEP) also announced a 5.6% dividend increase recently at the fourth quarter conference call on Feb 14, 2013.
Coca-Cola’s fourth quarter adjusted earnings per share marginally beat the Zacks Consensus Estimate by a penny. Moreover, earnings rose 15% from the prior-year quarter as tepid revenue growth was offset by solid operating margins, which gained from two extra selling days and lower-than-expected currency headwinds.
Net revenue increased 4% year over year in fourth quarter 2012, as benefits from volume growth and concentrate (syrups, powders etc used in finished beverages) sales were largely offset by an almost flat price/mix. Constant currency revenues increased 5% in the quarter as currency hurt revenues by 1%. The top-line results marginally missed the Zacks Consensus Estimate.
The Coca-Cola Company currently carries a Zacks Rank #3 (Hold). Overall, we are encouraged by Coca-Cola’s global reach, strong brand power, expanding presence outside the U.S. and its solid cash position. However, muted volume trends of carbonated beverages, soft economic conditions and a tough currency environment concern us.
Some of Coca-Cola’s bottling companies are currently doing well and have a bright outlook. These include Coca-Cola Hellenic Bottling Company S.A (CCH) and Coca-Cola Enterprises Inc. (CCE), both carrying a Zacks Rank #2 (Buy).
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