Two big companies reported on Tuesday. One lost money and the other made a lot of it. Boeing (BA) lost $116 million in the third quarter, and its stock fell 11%. Coca-Cola (KO) earned $4.06 billion, raised its outlook for the year, and its stock slipped $1.52. Earnings day grades a company against what people expected. That's the whole game.
Start with Boeing. A year ago it lost $5.34 billion in the same quarter. This time the loss was $116 million, or 26 cents a share. Revenue came in at $24.19 billion, up about 4%. The defense, space and security unit did much of the lifting. The quarter also carried a payment of roughly $700 million to the Justice Department. It covers a settlement over Boeing's role in two fatal 737 MAX crashes, in 2018 and 2019. Heavy spending on new airplane production and other charges weighed too. Even so, Boeing kept generating cash. The Journal's Drew FitzGerald calls that a key test of whether the turnaround is working.
The stock still had its worst day since the pandemic in 2020, down 11%. Costs in the commercial-jet unit ran higher and canceled out strong sales growth at the defense, space and security unit. Investors wanted the jet unit to turn, and it didn't. The shares closed at $168.18, down $20.13, a new 52-week low. A loss that shrank by billions wasn't enough. The market had already priced in the shrinking.
Coke did everything right, and still slipped
Coca-Cola's quarter was the opposite story. Profit came in at $4.06 billion, or 93 cents a share, up from $3.68 billion a year earlier. Adjusted earnings were 91 cents against the 88 cents analysts expected. Revenue grew 7% to $13.38 billion, also ahead of estimates. Case volume rose 5%. Regular Coke, Coke Zero Sugar and Diet Coke all grew. The company now sees adjusted earnings growing at least 11% this year, up from 9% to 10%. The stock closed at $91.18, down $1.52. A beat and a raise bought it a small down day. The good news was expected too.
Our read
This one is about risk, and about how markets price news (Investments/Risk · IN04). Boeing's loss shrank from $5.34 billion to $116 million, and the stock had its worst day since 2020. Coke beat on profit and sales and slipped anyway. The move on earnings day is the gap between the result and the hope, and the hope was already in the price. Boeing is held at weight in 7 books. Nothing added. Coca-Cola is held at weight in 26 books. Nothing added. We wrote about Pepsi's small fixes last week. Coke's quarter shows what the winning side of that fight looks like.
The concrete thing is the biggest single stock you own. This week, look up what it did on its last earnings day. Then write down whether you'd have held through a day like Boeing's. If the answer is no, the position is too big for you, whatever the company. Nobody waits for the first drop to find the umbrella. Bring the list and we'll size it together.