Coca-Cola shares retreat the most in 10 weeks on Thursday, company projects lower full-year profit in 2017 on higher re-franchising costs

February 10, 2017 8:35 am

The largest beverage maker worldwide, Coca-Cola Company (KO), said it projected a drop in its full-year profit due to higher-than-expected costs related to the re-franchising of its bottling operations in the United States.

Coca-Cola shares registered their largest daily drop since November 30th on Thursday, while also ending a five-day streak of gains. The stock went down 1.83% ($0.77) to $41.25, after touching a daily low at $40.72, or a level not seen since January 13th ($40.69). In the week ended on February 5th the shares of the beverage company added 0.22% to their market value compared to a week ago, which marked a third consecutive period of gains, but yet, the smallest increase since the week ended on May 15th 2016. The stock has erased earlier monthly advance and is now down 0.77% so far during February, after edging up 0.27% in January. The latter has been a second straight month of gains. For the entire 2016, the shares of the NYSE-listed beverage maker lost 3.49%.

The company now projects its 2017 adjusted earnings per share to shrink at a rate between 1% and 4%, following reported earnings of $1.91 per share during the past year. The median forecast by analysts had pointed to earnings of $1.97 per share, according to Thomson Reuters I/B/E/S.

At the same time, net income attributable to shareholders was reported to have decreased to $550 million (13 cents per share) during the quarter ended on December 30th from $1.24 billion (28 cents per share) during the same period of 2015. Re-franchising of bottling operations in the US was reported to have cost $919 million during the three-month period.

Coca-Cola’s earnings per share, excluding special items, were reported at $0.37 during the quarter ended on December 30th, or a figure that matched market expectations.

The company’s net operating revenue shrank for a seventh consecutive period in the last three months of 2016 to reach $9.41 billion. However, the actual figure topped market consensus, pointing to a larger drop (to $9.13 billion).

Coca-Cola’s volume sales in North America grew 1% during the last quarter of 2016, supported by higher sales of carbonated sodas such as Sprite and Fanta. On the other hand, volume sales worldwide were reported to have fallen 1% in Q4, due to the impact of high inflation rates in Latin America region.

Daily and Weekly Pivot Levels

With the help of the Camarilla calculation method, today’s levels of importance for the Coca-Cola stock are presented as follows:

R1 – $41.34
R2 – $41.43
R3 (Range Resistance – Sell) – $41.51
R4 (Long Breakout) – $41.78
R5 (Breakout Target 1) – $42.09
R6 (Breakout Target 2) – $42.22

S1 – $41.16
S2 – $41.07
S3 (Range Support – Buy) – $40.99
S4 (Short Breakout) – $40.72
S5 (Breakout Target 1) – $40.41
S6 (Breakout Target 2) – $40.28

By using the traditional method of calculation, the weekly levels of importance for Coca-Cola Company (KO) are presented as follows:

Central Pivot Point – $41.51
R1 – $41.82
R2 – $42.10
R3 – $42.41
R4 – $42.72

S1 – $41.23
S2 – $40.92
S3 – $40.64
S4 – $40.36

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