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Friday October 7, 2022

Finances

Finances
 

Coca-Cola Earnings and Revenues Rise

Coca-Cola Company (KO) released its second quarter earnings report on Tuesday, July 26. The company beat Wall Street's earnings and revenue expectations, causing shares to jump after the report's release.

Coca-Cola posted net revenue of $11.33 billion for the quarter. This is up 12% from $10.13 billion in revenue reported at the same time last year and above Wall Street's expectation of $10.56 billion.

"Our results this quarter reflect the agility of our business, the strength of our streamlined portfolio of brands, and the actions we've taken to execute for growth in the face of challenges in the operating and macroeconomic environment," said James Quincey, Coca-Cola CEO. "We are staying true to our purpose, executing on our strategy and delivering value for our stakeholders."

The iconic Atlanta-based beverage company reported a profit of $1.91 billion, down 28% from $2.64 billion in the same quarter last year. On an adjusted earnings per share basis, Coca-Cola reported earnings of $0.44 per share, down from $0.61 per share at this time last year.

Coca-Cola noted that it continues to work toward its "World Without Waste" initiative with the goal of eliminating waste and reducing carbon emissions through high quality recycled products and redesigned packaging designs. Sparkling soft drinks grew 8% in the quarter, Coca-Cola Zero Sugar grew 12% and sparkling flavors grew 11%. The company's coffee line grew 15%, due in part to its expansion of Costa coffee products.

Coca-Cola Company (KO) shares closed at $64.17, up 4.3% for the week.

Boeing's Earning's Report Released


Boeing Company (BA) announced second quarter earnings Wednesday, July 27. The company's revenue and earnings are still recovering from turbulence related to their aircraft.

Boeing reported quarterly net revenue of $16.7 billion, below the $17.6 billion analysts expected. Last year at this time, quarterly net revenue was recorded at $17.0 billion.

"We made important progress across key programs in the second quarter and are building momentum in our turnaround," said Dave Calhoun, Boeing CEO. "As we begin to hit key milestones, we were able to generate positive operating cash flow this quarter and remain on track to achieve positive free cash flow for 2022. While we are making meaningful progress, we have more work ahead."

Boeing reported net income of $160 million, down 72% from net income of $567 million at this time last year. This drop put adjusted earnings of $0.32 per share, compared to the $1.00 earnings per share from a year ago.

The Seattle-founded aerospace giant is working to resolve manufacturing issues with its 787 Dreamliner and stated in its earning's report that it is preparing to resume deliveries of the aircraft. Boeing's 737 Max aircraft, the best-selling plane in the company's history, had been grounded after fatal crashes, but the company is close to completing the global safe return to the 737 MAX to the skies. Boeing's production of the 737 MAX increased to 31 planes per month. The company's commercial airplane deliveries were up 53% in the quarter, with its backlog growing to a value of $297 billion.

Boeing Co (BA) shares closed at $159.31, relatively unchanged for the week.

Chipotle Releases Earnings Report


Chipotle Mexican Grill, Inc. (CMG) released its second quarter earnings report on Tuesday, July 26. The fast-casual chain restaurant company's shares were up more than 8% following the report's release.

Chipotle reported net revenue for the quarter of $2.21 billion, up 17% from $1.87 billion reported at this time last year. Net revenue was below Wall Street's expectations of $2.24 billion.

"We are pleased with our second quarter performance during a period of inflation and consumer uncertainty," said Brian Niccol, CEO of Chipotle. "Our pricing power and value proposition remain strong as our culinary and food with integrity commitment continues to be a key point of differentiation."

The company reported net income of $259.94 million or $9.32 per share. This is up from $187.97 million or $6.68 per share in the same quarter last year.

The California-based restaurant company reported an increase in comparable restaurant sales of 10.1% for the quarter. In-store sales increased 35.9% in the quarter. Digital sales made up 39% of food and beverage revenues. The company opened 42 new restaurants in the quarter. Chipotle reported menu price increases offset higher costs for avocados, packaging, dairy, beef and chicken.

Chipotle Mexican Grill, Inc. (CMG) shares ended the week at $1,564.22, up 15.5% for the week.

The Dow started the week of 7/25 at 31,951 and closed at 32,845 on 7/29. The S&P 500 started the week at 3,966 and closed at 4,130. The NASDAQ started the week at 11,838 and closed at 12,391.
 

Treasury Yields Move Lower

U.S. Treasury yields fell late in the week as key economic data show signs of contraction. The Federal Reserve announced another rate increase in the hopes to decelerate inflation.

On Wednesday, the Federal Reserve Open Market Committee unanimously approved a 75 basis point hike to interest rates, above its own prior guidance. This is the second consecutive hike, bringing its benchmark rate to a range of 2.25% to 2.50%.

"We think it is necessary to have growth slow down," said Federal Reserve Chair, Jerome

Powell. "Growth is going to be slowing down this year for a couple of reasons."

On Thursday, the U.S. Bureau of Economic Analysis reported the personal consumption expenditure price index rose 6.8% year-over-year for June. On Friday, the preliminary second quarter gross domestic product (GDP) reading decreased 0.9% on an annualized basis.

"We're not in recession, but it's clear the economy's growth is slowing," said chief economist at Moody's Analytics, Mark Zandi, "The economy is close to stall speed, moving forward but barely."

The 10-year Treasury note yield finished the week of 7/22 at 2.64%, while the 30-year Treasury note yield finished the week at 2.97%.
 

Mortgage Rates Decline

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, July 28. The U.S. mortgage rates eased this week.

The 30-year fixed rate mortgage rate averaged 5.30%, down from 5.54% last week. At this time last year, the 30-year fixed rate mortgage averaged 2.80%.

This week, the 15-year fixed rate mortgage averaged 4.58%, down from 4.75% last week. Last year at this time, the 15-year fixed rate mortgage averaged 2.10%.

"Purchase demand continues to tumble as the cumulative impact of higher rates, elevated home prices, increased recession risk, and declining consumer confidence take a toll on homebuyers," said Freddie Mac's Chief Economist, Sam Khater. "It's clear that over the past two years, the combination of the pandemic, record low mortgage rates, and the opportunity to work remotely spurred greater demand. Now, as the market adjusts to a higher rate environment, we are seeing a period of deflated sales activity until the market normalizes."

Based on published national averages, the savings rate cap was 2.33% as of 7/18. The one-year CD national rate cap averaged 4.11%.

Published July 29, 2022

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