Coca-Cola Co reported a better-than-expected quarterly profit on Tuesday, aided by growth in emerging markets, but its shares fell as revenue was lighter than anticipated and investors looked for stocks with stronger growth potential.

The world's largest soft-drink maker's broad geographic footprint, especially in developing markets such as India and China, helped it weather an industry-wide slowdown in the United States.

Coke gets the bulk of its revenue from abroad, where soft-drink sales are still growing despite the weak global economy. Still, revenue declined more than analysts expected as growth slowed and the stronger U.S. dollar reduced the value of international sales.

Excluding items, profit fell 9 percent to 92 cents per share, topping analysts' average forecast of 89 cents per share, according to Reuters Estimates.

Despite the stronger-than-expected profit, Coke's shares fell 61 cents to $50.42.

I'm not so sure that it's Coke so much as maybe the shift toward more cyclical issues like Caterpillar, said Hank Smith, chief investment officer for Haverford Investments, which has owned Coke shares for 30 years and bought shares of Caterpillar Inc last week.

Shares of Caterpillar jumped nearly 13 percent on Tuesday after the machinery maker posted a better-than-expected profit and raised its full-year outlook.

Shares of Coke have risen about 25 percent since the beginning of March, in line with a rebound in the Dow Jones industrial average <.DJI>. Caterpillar has soared nearly 50 percent.

While this has been a broad-based rally, it's been led by the more economically sensitive sectors and issues and I think that is the market behaving as a leading indicator, forecasting a recovery in the economy, said Smith.

VOLUME RISES, REVENUE FALLS

Atlanta-based Coke's net income was $2.04 billion, or 88 cents per share, in the second quarter ended July 3, up from $1.42 billion, or 61 cents per share, a year earlier.

Currency reduced comparable operating income by 14 percent in the quarter. Coke expects an estimated 12 percent to 14 percent hit in the third quarter and a low single-digit hit in the fourth, slightly worse than some analysts had expected.

Volume rose 4 percent after rising just 2 percent in the first quarter.

Volume fell 1 percent in North America but rose 5 percent internationally, driven by gains of 33 percent in India and 14 percent in China. International sales growth overall had been in the 5-percent-to-7-percent range last year.

Operating revenue fell 9 percent to $8.27 billion, missing analysts' average expectation of about $8.57 billion, according to Reuters Estimates.

The future of Coke's North American business model, through which it sells drink concentrate to a network of independent bottlers that in turn bottle and distribute the drinks, has been called into question after rival PepsiCo Inc launched a takeover bid for its two biggest bottlers.

Coke Chief Executive Muhtar Kent has several times defended the company's franchise model, but analysts have said that if PepsiCo succeeds in its bid, Coke may have to follow suit to erase what would likely be a large competitive disadvantage.

We believe our unique global franchise model is the best way to win in the market, Kent said in a statement on Tuesday.

Coke does not provide specific earnings forecasts, but said in April it was looking to reach its long-term target of 3-percent-to-4-percent volume growth and high single-digit earnings-per-share growth this year.

(Reporting by Jessica Wohl; Editing by Brian Moss and Derek Caney)

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