Coca-Cola Consolidated (NASDAQ:COKE), the former Coca-Cola Bottling Company, was in free fall on Wednesday after announcing its quarterly results. Indeed, COKE stock closed down 23% after failing to meet earnings per share (EPS) expectations.
This begs the question: What exactly is Coca-Cola Consolidated?
Well, investors should first note that today’s news is only relevant to Coca-Cola Consolidated, not Coca-Cola (NYSE:KO). This is an important distinction as COKE refers to an independent bottling company that only produces roughly 12% of what Coca-Cola brings in as revenue. In the early 1900s, Coca-Cola realized it was far more efficient to simply provide the brand tags and raw material to independent bottlers and have them actually produce the soda everyone knows. As such, Coca-Cola Consolidated refers to a sort of congregated group of bottling companies. That is to say, Coca-Cola Consolidated does not reflect the financial health of Coca-Cola.
In fact, despite COKE’s massive drop, KO stock only closed down about 1% today. Which, is actually better than the greater stock market, as the S&P 500 closed down nearly 2%.
With that said, what’s behind Coca-Cola Consolidated’s drop today?
COKE Stock Sees Steep Decline Despite Beating Expectations
COKE reported its fourth-quarter and full-year 2021 numbers yesterday afternoon, to mixed responses. The bottling company reported $6.76 in non-GAAP net income per share, quite a bit below estimates of $7.62.
Investors were clearly displeased by the bottling company’s recent performance, as reflected in its steep decline today. With that said, COKE’s earnings woes were likely amplified by the state of the market as a whole. On Tuesday, Feb. 23, the S&P 500 entered correction territory after dropping 10% from its high. Amidst swirling concerns over inflation, interest rates and recent the geopolitical tensions in Ukraine, investor uncertainty seems to be hitting a fever pitch.
As such, it’s somewhat unclear if today’s COKE drop is wholly attributable to its admittedly underwhelming earnings report, or if the greater market decline is simply claiming another victim.
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On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.