Update: Coca-Cola Earnings - Another Disappointing Quarter

| About: The Coca-Cola (KO)
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Coca-Cola reports its Q2 2014 results.

The company saw EPS decline 1%, and continued to see revenue weakness due to currency headwinds.

Unit volumes did increase, though consumers are shifting towards healthier options and away from soda.

I continue to hold Coca-Cola due to its modest valuation, history of robust dividend growth, and its global footprint.

Simply put, Coca-Cola (NYSE:KO) did not have a very good quarter. The company struggled, seeing its reported EPS decline 1% to $0.58. When adjusted for certain items, EPS was $0.64, up only 1% from last year. Coca-Cola also faced revenue pressure, down 1% in the quarter and 3% YTD. Here, unfavorable currency exchange rates had an outsized impact, with the largest decline occurring in Latin America, especially in Venezuela.

On the bright side, Coca-Cola did see unit volume growth, up 3% companywide for the quarter. Eurasia and Africa, and Asia-Pacific led the way, posting 5% and 8% volume growth respectively. The company noted an improved business environment in Europe, thanks to stabilized economic conditions in the Nordic region, Germany, and the Iberian peninsula. However, these numbers hide the fact that consumers are shifting toward healthier options, with packaged water (7%+), teas (4%), and sports drinks (6%+) outperforming other ready-to-drink beverages.

Financially, Coca-Cola continued to be a cash machine, generating $4.5 billion in operating cash YTD, up 13% from last year. The company remains committed to paying out ever increasing dividends and returning capital to shareholders via share buybacks. Coca-Cola has bought back $1.3 billion of stock so far this year, and is on target to repurchase $2.5 and $3.0 billion by the year-end. As I noted in a previous article, Coca-Cola has already increased its quarterly dividend this year to $0.31 per share, up 11% from $0.28. However, given the weakness seen operationally, I would be hesitant to add to my position, even with today's (July 22) 3% decline in share price.

Disclaimer: The opinions in this article are for informational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned. Please do your own due diligence before making any investment decision.

Disclosure: The author is long KO. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.