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The Zacks Analyst Blog Highlights: The Coca Cola, Coca-Cola Enterprises, Archer Daniels Midland, Bunge Limited and Corn Products International

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Here are highlights from Tuesday's Analyst Blog:

S&P Ups Coke's Ratings Outlook

Rating agency Standard & Poor's Ratings Services (S&P) has upgraded its ratings outlook on The Coca Cola Company (NYSE: KO) on the back of the company's strong operations and credit quality.

Despite the prevailing market turmoil, S&P has revised Coca Cola's outlook to "positive" from "stable" and reiterated "A+" long-term corporate credit and "A-1" short-term corporate credit and commercial paper ratings. The ratings agency continues to expect robust performance from Coca Cola even in the uncertain economic environment.

Coca Cola recently reported strong operating earnings of $1.03 per share in the third-quarter 2011, ahead of the Zacks Consensus Estimate by a penny. It was also higher than the year-ago EPS by 12%. The results were encouraged by strong growth outside the U.S. and in emerging markets. Coca Cola also sold more drinks in each region during the quarter and continued to gain market share in North America.

According to S&P, Coca Cola's acquisition of Coca-Cola Enterprises Inc. (NYSE: CCE)'s North American bottling operations has led to expansion and stands to benefit from the manufacturing and distribution efficiencies in US.

Additionally, the rating agency stated that Coca Cola has the ability to attain an annual revenue growth in the range of low to mid-single-digit, despite the ongoing pressure on its EBITDA margin. S&P also believes that the company's cash flows will be able to retain the credit quality to support a higher rating.

Coca Cola currently holds a Zacks #3 Rank, which translates into a short-term Hold rating. On a long-term basis, we maintain a Neutral rating on the stock.

Rising Costs Dent ADM Profits

Archer Daniels Midland Company (NYSE: ADM) reported disappointing first-quarter 2012 results. Earnings for the reported quarter were 58 cents per share compared with 67 cents per share in the year-ago quarter. Quarterly earnings also missed the Zacks Consensus Estimate of 69 cents a share. Earnings in the reported quarter declined primarily due to higher agricultural commodity prices.

On a reported basis, excluding special items, quarterly earnings surged approximately 26.0% to 68 cents from the prior-period earnings of 54 cents.

Quarterly Details

Archer Daniels' quarterly net sales surged 30.4% year over year to $21,902.0 million, beating the Zacks Consensus Estimate of $18,550.0 million. The growth in net sales was mainly attributable to a robust jump of 25.1% in Agricultural Services to $8,666.0 million, a rise of 36.7% in Oilseeds Processing revenues to $8,326.0 million and an increase of 52.8% in Corn Processing revenues to $3,293.0 million.

Total segment operating profit for Archer Daniels increased to $660.0 million from $462.0 million in the prior-year quarter. Operating profit for Agricultural Services segment grew 84.8% to $244.0 million from $132.0 million in the year-ago period, reflecting strong results from international operations, export recovery in the Black Sea region and expanding footprint through acquisition of nine grain elevators in Wisconsin.

Archer Daniels' Corn Processing segment's operating profit declined drastically to $179.0 million from $341.0 million last year. The decline primarily resulted from a significant surge in net corn costs, partially offset by higher average selling price and increased processing volume.

Archer Daniels' Oilseeds Processing segment recorded a quarterly operating profit of $221.0 million compared with an operating profit of $308.0 million in the year-ago period. The decline was primarily due to weak margins in soybean crushing and European rapeseed crushing environment coupled with poor results in Europe and South America.

Operating profit from the other business segment came in at $55.0 million compared with an operating loss of $16.0 million in the year-ago quarter, primarily due to stronger Cocoa Press margins.

The long-term debt-to-capitalization ratio was 31.1% compared with a long-term debt-to-capitalization ratio of 31.8% in the prior-year quarter.

Archer Daniels, which competes with Bunge Limited (NYSE: BG) and Corn Products International Inc. (NYSE: CPO), currently has a Zacks #3 Rank, implying a short-term Hold rating on the stock. The company retains a long-term Underperform recommendation.

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