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TheStreet Open House

Coca-Cola (KO) Looks To Sell Two Bottling Operations

NEW YORK (TheStreet) -- Coca-Cola (KO) announced on Friday separate deals to sell two bottling operations in Chicago and Florida.

Shares of the beverage giant were gaining 0.2% to $37.39.

The company said it signed two letters of intent with individual bottlers, and must reach definitive agreements for the deals to take effect. Coca-Cola didn't disclose financial terms of either agreement.

The move to sell the two bottling operations is part of Coca-Cola's plan to franchise its North American bottler. The company signed five letters of intent with other bottlers in April 2012.

Must read: Coca-Cola's Pause Can Refresh Your Profits

TheStreet Ratings team rates COCA-COLA CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about its recommendation:

"We rate COCA-COLA CO (KO) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, notable return on equity, good cash flow from operations, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • COCA-COLA CO has improved earnings per share by 8.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, COCA-COLA CO increased its bottom line by earning $1.96 versus $1.85 in the prior year. This year, the market expects an improvement in earnings ($2.08 versus $1.96).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Beverages industry and the overall market, COCA-COLA CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has slightly increased to $3,756.00 million or 2.56% when compared to the same quarter last year. In addition, COCA-COLA CO has also modestly surpassed the industry average cash flow growth rate of -6.47%.
  • The gross profit margin for COCA-COLA CO is rather high; currently it is at 64.29%. Regardless of KO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, KO's net profit margin of 20.34% compares favorably to the industry average.
  • KO, with its decline in revenue, slightly underperformed the industry average of 3.1%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • You can view the full analysis from the report here: KO Ratings Report

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