Stocks closed Friday’s session mixed, with the Dow Jones Industrial Average (DJINDICES: ^DJI) and S&P 500 (SNPINDEX: ^GSPC) managing to scrape out modest gains. However, the Nasdaq Composite (NASDAQINDEX: ^IXIC) lagged behind, reflecting the uncertainty that investors across Wall Street are feeling about the prospects for 2023.
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| Index | Daily Percentage Change | Daily Point Change |
|---|---|---|
| Dow | 0.50% | 169 |
| S&P 500 | 0.22% | 9 |
| Nasdaq | (0.61%) | (71) |
Many investors watch the Dow Jones Industrial Average stocks more than the rest of the market because the 30 components that make up the index include some of the best-known companies in the world. Next week, all eyes will be on Coca-Cola (NYSE: KO) and Cisco Systems (NASDAQ: CSCO) because both Dow components are scheduled to release their latest financial results. Below, you’ll learn more about what’s been happening with Coca-Cola and Cisco, and see whether investors are optimistic about their prospects heading into next week’s reports.
Coca-Cola looks to win the soft drink challenge
Coca-Cola is scheduled to release its financial results on Tuesday before the market opens. The beverage giant’s stock held up well during 2022, but it has gotten off to a rocky start early this year as market sentiment has been shifting away from defensive sectors like consumer staples and toward higher-growth industries.
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The third-quarter financial report Coca-Cola delivered in late October showed the general strength that the beverage company has enjoyed lately. The company used its pricing power to fight back against inflationary pressures, boosting its revenue by 10% year over year and seeing earnings per share grow 7% on a comparable basis. Moreover, management gave an upbeat assessment for the remainder of the year, projecting 14% to 15% organic sales growth and fighting successfully against weakness in foreign currencies.
Yet some investors are concerned that Coca-Cola stock might be getting too expensive. Despite signs of resilience and upward momentum in its financial results, earnings multiples in the mid-20s to high-20s are above average for the Dow, particularly with interest rates having risen dramatically. Nevertheless, a dividend yield of nearly 3% makes the stock attractive for income investors.
Shareholders expect flat earnings performance on a more modest uptick in sales for the fourth quarter. If Coca-Cola doesn’t deliver, then the stock’s woes from earlier in 2023 could be just the start of a longer downtrend.
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Cisco looks to power up
Cisco Systems is scheduled to deliver its fiscal 2023 second-quarter earnings report on Wednesday after the closing bell. Most investors expect only small gains in sales and profits, but those might be enough to satisfy those who are nervous about the tech space.
The fiscal first-quarter results Cisco reported in November made it clear that technology is in a slow-growth mode right now, but they were still enough to please investors. Revenue rose 7% year over year to $13.6 billion, and a big drop in share count helped lift its earnings by 5% to $0.86 per share.
Shareholders have liked the fact that Cisco is making a transition away from complete reliance on hardware. Now, its subscription-based software platform generates recurring revenue that is somewhat smoothing out the company’s financial results. That could hold back its growth, but it will also protect Cisco during tough times.
Investors should look for management’s views on how the remainder of its 2023 fiscal year will go. Moreover, if the company can keep buying back stock, that could support further share price gains for months or even years to come.
