Do tariffs and pricing matter?
Trivariate used NLP to analyse 2,488 earnings calls since Mar 25, finding that 37% of companies mentioned both tariffs and pricing - most notably in Materials, Consumer Discretionary and Consumer Staples sectors. Lower-quality and value stocks were more likely to raise the issue. The most cited terms were “uncertainty” and “indirect impacts”, flagged by 584 companies including Microsoft, JPMorgan and Coca-Cola. From a performance lens, firms discussing tariff benefits or direct price pass-throughs outperformed by over 3% vs. those referencing absorption or uncertainty. "Price increases" and "surcharges" were associated with weaker performance, while "wait and see" commentary outperformed.
Edition: 213
- 13 June, 2025
The effect of rising food inflation
Consumer Staples
Neil Newman warns of pressure on consumer spending heading into early summer, with food price hikes expected to be particularly sharp this spring. This adds to concerns over frugality in household and beverage consumption, as falling real wages weigh on retail demand. The combination of historically high overweight positions in the Food sectors ETF relative to the index combined with 3-month reversal of flows provides the backdrop to look for structural or fundamental challenged constituents to short. Highlighted names include Kirin Holdings, Meiji Holdings and Coca-Cola Bottlers Japan Holdings.
Edition: 211
- 16 May, 2025
Consumer Staples
Woozle initiates coverage with a Short recommendation - channel survey respondents reported 4Q24 European revenue declines of -1.5% Y/Y, missing the flat growth market expectation as consumers shifted to competitors like Coca-Cola. Americas revenue grew +3.6% Y/Y, but fell short of the +11% consensus forecast. Market share losses were noted in both regions. Overall sales relied on increased discounting to offset price hikes, reflecting weak demand. Inventory issues and underperforming products like Juices hampered growth, while Indian Tonic Water remained a bright spot in FEVR’s portfolio.
Edition: 201
- 13 December, 2024
Consumer Staples
CFO Nik Jhangiani will help spur the company’s rebound with his technical skills and ability to drive change. He previously worked at Coca-Cola Europacific Partners, where he streamlined operations, oversaw large acquisitions, and ensured those deals and other investments earned value-creating returns. He also excelled at investor relations, which will be helpful for a company that has underperformed for two years under CEO Debra Crew’s tenure as COO and CEO. Paragon’s analysis includes interviews with former colleagues of Jhangiani. Sources were universally positive. The only reason he will fail, they said, is if others in the DGE organisation actively resist his programmes.
Edition: 201
- 13 December, 2024
Consumer Staples
KO’s guidance looks like a stealth cut - coming into the year, the group guided to $2.80-$2.82 EPS for 2024, up 4%-5% from $2.69 in 2023. So far, KO has beaten forecasts by 2 cents, 3 cents and 2 cents YTD, but guidance is only up to $2.82-$2.85. BTN believes investors should be concerned about the following items: 1) A wide spread in pricing between what KO is taking in Latin America and North America vs. PepsiCo, who has seen pricing growth become much more muted. 2) The tax issues on transfer pricing are getting worse. 3) At the same time KO just paid $6.0bn to the IRS, payables and accrued expenses keep rising and BTN cannot find much explanation for it.
Edition: 199
- 15 November, 2024
Financials
It’s ROE & long-term growth rates are as good as Coca-Cola’s, but CACC never trades on more than 10x EPS. Today’s outlook is even stronger and yet bizarrely the PE even lower (8x on Dec 22 earnings). CACC should be looked at closely by those that seek wonderful compounding. Instead, Andrew Hollingworth expects many investors will be quick to dismiss the idea of it as a good investment given that it lends money to sub-prime borrowers to buy cars. In this report, he provides a compelling argument as to why that decision would be a mistake.
Edition: 159
- 28 April, 2023
Consumer Staples
2023 guide is $9.5bn in FCF - dividend is $8.0bn + $1.5bn in repurchases to hold shares flat. Tax dispute on transaction splitting may need to be appealed soon. KO estimates it will need to post $5.2bn in cash and the dispute involves $14bn in potential payments. Interest cost may rise and share buybacks fall. Furthermore, inventory DSIs finally jumped 10 days and could pressure gross margin more than forecast as management says pricing will be hard to gain in 2023 and Latin America. Pricing exceeded FX hits by 10-20 points of late.
Edition: 158
- 14 April, 2023
Six companies at risk of inventory-related 1Q'22 misses
The current macro environment is bringing to the forefront the importance of the different impacts that the various inventory accounting methods have on company results during times of inflation. BTN have noticed several companies whose inventory levels have declined which may have shielded them from the full impact of rising costs. Meanwhile, their revenues have benefitted from aggressive price hikes. They believe this may be setting the stage for earnings disappointments in 1Q and 2Q 2022. Companies highlighted General Mills, The Coca-Cola Co, The Hershey Co, Post Holdings, Ball Corp, and Mondelez International.
Edition: 131
- 18 March, 2022
Consumer Staples
Raised prices to grow sales and margins amid cost inflation against easy comps. However, KO has NOT fully replaced inventory at higher costs as DSIs are down 10 days (with units likely down more than dollar terms). The repurchasing delays should pressure margins more quickly as KO will be buying at even higher costs than last fall. 1Q21 and 2Q21 bring tougher comps on pricing and volume and BTN expects margin pressure to build.
Edition: 129
- 18 February, 2022