Coca-Cola (KO) Falls Following In-Line Q3 Results

The world's largest soft drink maker, the Coca-Cola Company (NYSE: KO), reported third-quarter EPS of $0.82, which was in-line with analyst estimates. Revenue for Q3 was $8.04 billion, falling just short of the consensus of $8.12 billion.

Coca-Cola reiterated what its biggest rival the Pepsi Co. (NYSE: PEP) had to say earlier this month when they reported similarly disappointing revenue results for the third-quarter.

The company does not expect to rebound in 2010 cautioning that the weak economy would keep consumer spending down, dropping shares 1.5%. The company is however optimistic that it will meet its long-term growth goals saying that the company is on track to, by the end of 2011, to meet its $500 million annualized savings expectations.

"We expect the consumer to continue facing economic uncertainties into 2010 and for consumer sentiment to recover slowly," Coca-Cola Company Chief Executive Muhtar Kent said in a statement.

Consumers are saving money by downgrading to private label drinks according to analyst Toon Van Beeck of IBISWorld. While UBS analyst Kaumil Gajrawala gave Coca-Cola high marks for its improving relationship with its largest bottler, Coca-Cola Enterprises (NYSE: CCE). Gajrawala however does not recommend Coca-Cola.

"That said, we prefer PepsiCo shares, which are currently trading at a 2 multiple point discount versus Coca-Cola," Gajrawala said.

Deutsche Bank's analyst said the results were solid overall, but challenges in two key profit markets remain a concern. The firm raised estimates by $0.02 to $3.09 for 2009, and $0.01 higher to $3.46 for 2010. They are maintaining their Buy rating and $62 price target.

Helping to stem the tide for Coca-Cola is the growth of business in developing markets. Volume in India and China climbed 37% and 15%, respectively. Volume also grew for the company in Latin America by 7% and by 6% in the Pacific Region.

Current market movement for the Coca-Cola Co. is -1.84% and -0.86% for Pepsi Co. Coca-Cola Enterprises Inc. is currently trading at 20.80, down 1.56%.

UPDATE: Click here to see some highlights from Coke's Q3 conference call.

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