Ticker Shock: Four Reasons Why Coke Is Still It
Thursday's top stories and stocks with potential to move.
Asian stocks were lower overnight. The Hang Seng and the Nikkei both closed down under 1%. Meanwhile, European stocks were in positive territory earlier this morning. And here in the US we're currently trading higher.
Here's what I'm focused on this morning:
Although I realize that many stocks are trading near or at their 52-week low, I have to say, I think the beating that Coca Cola's stock price has received is excessive.
Just ponder, for a moment, all this company has to offer:
1. It's been around since 1886; its products are enjoyed around the world, and no other company is about to knock it out of the box.
2. It's still expected to earn $3.12 a share this year and $3.38 a share next.
3. Some insiders are buying the shares.
4. It pretty recently announced that its increasing its dividend.
Long story short, I think this is one of those companies that just can't be ignored. Heck - I can just picture Warren Buffett -- Berkshire Hathaway (BRK) has been a big holder -- guzzling one of these babies right now while putting down a Big Mac.
At the close last night, the California-based company came out with its third-quarter numbers. In a word - wow.
In the period ended February 28, it earned $0.35, excluding items. That was a sweet $0.03 better than the estimate that was out there. And its sales line came in at about $5.45 billion, which seemed to be in line with expectations I'm seeing.
But I think the biggest thing that stood out to me -- and that I think will be generating the most buzz -- was the dividend announcement. Dividend? Yup. Per the release:
"Oracle also announced today that its Board of Directors intends to pay a quarterly cash dividend of $0.05 per share, or $0.20 per share annually, on its common stock. The Board declared the first cash dividend of $0.05 per share of outstanding common stock to be paid to shareholders of record as of the close of business on April 8, 2009, with a payment date of May 8, 2009. Future declaration of quarterly dividends and the establishment of future record and payment dates are subject to the final determination of Oracle's Board of Directors."
I certainly wouldn't have expected this, but this could make the stock interesting to a whole new set of investors.
The downside -- which I think the investment community may overlook, given the above -- is that it's reportedly looking for adjusted earnings of $0.42 to $0.46 in the fourth quarter, whereas the estimate I'm seeing is for $0.46.
Will this announcement give a big goose to tech in early trading? I hope so, but I'm not so sure. Oracle seems to be, in a sense, an island almost all its own. I do think it will be in the green in early trading.
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