Latest news with #pricingpower
Yahoo
04-08-2025
- Business
- Yahoo
The Biggest Takeaway From Coca-Cola's July 22 Earnings Report
Key Points Coca-Cola's revenue and earnings both beat analyst estimates in the fiscal 2025 second quarter. Thanks to a key competitive advantage, the company is able to consistently flex its pricing power. Dividend investors will likely find the stock a compelling portfolio addition. 10 stocks we like better than Coca-Cola › Coca-Cola (NYSE: KO) reported financial results for its second quarter (ended June 27) recently. The business exceeded Wall Street estimates, with revenue of $12.6 billion and adjusted earnings per share of $0.87 both coming in ahead of analyst expectations. Shareholders certainly like to see this kind of performance. However, finding the biggest takeaway from this beverage stock's July 22 earnings report requires investors to look past the headline figures. Instead, focus on something that matters over the long term. Here's what you should know about one of Coca-Cola's most attractive business qualities. Being able to ask customers to pay more Coca-Cola's organic revenue, which is a non-GAAP metric that excludes the impact of acquisitions, divestitures, and currency fluctuations, increased by 5% in the latest fiscal quarter. This figure was negatively impacted by concentrate sales, which declined 1%. But it was boosted by a 6% jump in price/mix. "Our price mix growth of 6% was primarily driven by approximately five points of pricing actions and one point of favorable mix," said CFO John Murphy on the Q2 2025 earnings call. This highlights what I believe is a key contributor to Coca-Cola's success: proven pricing power. This benefit arising from its ability to raise prices yet retain business comes up in virtually all of its earnings reports. During the first quarter of this fiscal year, price/mix growth was 5%. Famed investor Warren Buffett believes pricing power is one of the clearest signals that a company is high quality. This probably explains why Berkshire Hathaway is a massive shareholder in Coca-Cola. In Coca-Cola's case, the ability to consistently ask customers to pay more demonstrates just how powerful the brand is. This intangible asset is precisely what makes up the company's economic moat. And that supports Coca-Cola's staying power: The business has been around for well over a century. It has 200 different brands sold in more than 200 countries and territories. A whopping 2.2 billion servings are consumed every day. Coca-Cola has the leading market share in the industry. And consumers have come to expect a consistent product. Add in Coca-Cola's top-notch marketing campaigns, and the company has figured out a way to drive deep emotional connections with customers. This market positioning means that Coca-Cola will likely be able to continue increasing prices indefinitely. Of course, the price hikes must be within reason. But the point is that because consumers have developed an affinity to the brand, there is loyalty that Coca-Cola can keep leveraging over time. Don't expect huge returns from Coca-Cola Coca-Cola is a fantastic business thanks primarily to its pricing power and brand positioning. This has helped it generate robust profits, to the tune of $3.8 billion in net income in Q2. That translates to a net profit margin of 30%. The stock might be a wise investment choice for those who like to generate income from their holdings. Coca-Cola's strong profitability has allowed the leadership team to raise the dividend in a jaw-dropping 63 straight years, with the latest bump being approved earlier in 2025. Its dividend yield of 2.97% is well ahead of the 1.25% that the average company in the S&P 500 index pays. However, investors looking to score huge returns will want to think twice. The stock won't provide enough capital appreciation to outperform the market. Coca-Cola simply doesn't register huge growth. This is an extremely mature company. Its drinks are already sold in every corner of the world, with minimal opportunities to drive meaningful expansion. Shares have significantly underperformed the S&P 500 in the past decade. In the rare event that Coca-Cola's P/E multiple dips well below 20, investors shouldn't buy the stock. But those searching for dividend income will have a different view. Should you invest $1,000 in Coca-Cola right now? Before you buy stock in Coca-Cola, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Coca-Cola wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $624,823!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,064,820!* Now, it's worth noting Stock Advisor's total average return is 1,019% — a market-crushing outperformance compared to 178% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 29, 2025 Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy. The Biggest Takeaway From Coca-Cola's July 22 Earnings Report was originally published by The Motley Fool
Reuters
23-07-2025
- Business
- Reuters
Alaska Air reinstates forecast as travel demand improves
CHICAGO, July 23 (Reuters) - Alaska Air Group (ALK.N), opens new tab on Wednesday reinstated its full-year outlook, citing improvements in both passenger traffic and pricing power. The Seattle-based airline, however, forecast a lower-than-expected profit for the third quarter.
Yahoo
23-07-2025
- Business
- Yahoo
Alaska Air reinstates forecast as travel demand improves
CHICAGO (Reuters) -Alaska Air Group on Wednesday reinstated its full-year outlook, citing improvements in both passenger traffic and pricing power. The Seattle-based airline, however, forecast a lower-than-expected profit for the third quarter. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
17-07-2025
- Business
- Yahoo
Datadog Versus Chronosphere Inside OpenAI
UBS analysts point out that OpenAI now runs Datadog (NASDAQ:DDOG) and privately held Chronosphere side by side to monitor its GPU workloads. While building an in?house tool seems unlikely, growing use of Chronosphere could squeeze Datadog's pricing power. Warning! GuruFocus has detected 3 Warning Sign with DDOG. Despite that risk, UBS kept a buy rating on Datadog and lifted its price target from 140 dollars to 165 dollars. The firm still expects mid 20 percent revenue growth and steady margins in the near term. Datadog's recent inclusion in the S&P 500 highlights its strong market momentum in observability. Even so, any shift in how OpenAI allocates spending between platforms may create pressure on fees. Investors will want to track usage trends closely. If volume gains outpace any customer migration, Datadog may enjoy a boost in revenue before any loss in share becomes meaningful. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
12-07-2025
- Business
- Yahoo
Salesforce (CRM): A Bull Case Theory
We came across a bullish thesis on Salesforce on Summit Stocks's Substack. As of 1st July, Salesforce's share was trading at $272.69. CRM's trailing and forward P/E were 42.55 and 24.43 respectively according to Yahoo Finance. Copyright: drserg / 123RF Stock Photo Salesforce recently announced a 6% average list price increase across some of its core products, effective August 1, 2025, following a 9% hike in 2023. The price increase applies to products such as Agentforce, Customer360 Apps, and Slack. Agentforce, a suite of AI features, will be offered in two tiers, with prices starting at $125 per user per month for add-ons and $550 per user per month for Agentforce 1 Editions. The company also raised list prices for its Enterprise and Unlimited Editions for Sales Cloud, Service Cloud, Field Service, and select Industries Clouds. This move has raised questions about Salesforce's pricing power and whether it can maintain its customer base without significant churn. The article examines whether Salesforce truly has pricing power, defined by five sources: differentiation, substitutes, switching costs, willingness to pay, and brand & behavior. While Salesforce has limited substitutes at the enterprise level, high switching costs, and continuous innovation, its core product is no longer unique, and competitors like Microsoft Dynamics offer similar capabilities. The company's attrition rate remains around 8%, and the 2023 price hike did not impact this figure. However, the next price increase will be a test of customers' willingness to pay. Salesforce's brand strength is significant in enterprise IT, but it does not necessarily translate to real pricing power. The price increase does not directly translate to a 6% revenue growth, as actual pricing depends on bundling, discounting, and negotiation. The move may indicate that Salesforce is confident in its ability to maintain customers despite the price hike. If successful, it could set a precedent for future price increases. However, if customers react negatively, it could impact growth. The company's guidance and customer reactions will be crucial in determining the impact of this price increase on Salesforce's stock and revenue growth. Previously, we covered a bullish thesis on Salesforce by Sergey on June 6, 2025, which highlighted the company's potential as a backdoor play on AI energy infrastructure. The stock has appreciated, but details are not available. This is not the case. Summit Stocks shares a similar view on Salesforce, but emphasizes the company's pricing power and potential revenue growth following a recent 6% price increase across some of its core products. While the previous thesis focused on Salesforce's indirect AI play, the current analysis concentrates on its direct business performance and customer retention. CRM isn't on our list of the 30 Most Popular Stocks Among Hedge Funds. While we acknowledge the risk and potential of CRM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None. This article was originally published at Insider Monkey.
