Coca-Cola Co (KO, Financial) is widely considered to be one of the best companies in the world. Its stellar track record and consistent financial performance earn glowing accolades from investors and market analysts. This high-quality stock is relatively resistant to volatile economic climates, where all too often, other companies experience sudden twists and turns. Coca-Cola's recent impressive earnings figures once again prove that it has what it takes to weather the storm, as it made steady returns despite price hikes.
With an attractive trailing 12-month dividend yield of 2.87% and a robust stock buyback program, Coca-Cola could represent a lucrative opportunity for risk-averse investors looking for long-term growth and stability, in my opinion. After all, when it comes to beverage branding success, pricing power and even shareholder-friendliness, Coca-Cola leads the pack.
Price hikes fail to dent Coca-Cola's momentum
Despite rising inflation and interest rates, Coca-Cola reported strong performance in the third quarter. Consumers continue to flock to their favorite carbonated drinks and juices, driving higher sales volumes even as prices rise. Coca-Cola's revenue has grown by 10% year-over-year to $11.1 billion, while profit increased by 14% - even higher than inflation! This robust performance shows that consumers remain willing to pay a premium for Coca-Cola's high-quality products and strong brand image. Organic revenue growth was 16%, while earnings per share grew by a healthy 14%,
For Coca-Cola, the biggest positive to come out of the recent earnings report is that rising prices did not severely impact the company in the global carbonated beverages market. Coca-Cola still dominates the industry. Therefore, the company can afford to increase prices in the face of economic headwinds. This stability can be attributed to Coca-Cola's near-monopoly of the carbonated drinks market in terms of customer share of mind, which has given it greater control over pricing decisions. In addition, Coca-Cola has seen strong growth in unit case volumes even with average selling prices increasing by 12%. Coca-Cola's resilience amidst shifting market conditions is a testament to its longstanding success and dominance within this highly competitive industry.
With the rise in sales of food and beverages, Coca-Cola expects organic revenue to increase by 14% to 15% in 2022, compared to previous estimates of 12% to 13% growth. Meanwhile, full-year adjusted earnings per share growth are forecast to range from 6% to 7%, up from previous estimates of 5% to 6%.
Focus on diversification is paying dividends
Coca-Cola has long been one of the world's most iconic and popular brands, thanks to its refreshing flavors and wide range of products. Over recent quarters, Coca-Cola has seen incredible growth as a result of shaking up its offerings to keep up with rising consumer demand while simultaneously cutting underperforming products and raising its prices to respond to inflation. This strong performance has been very well-received by Coca-Cola's loyal customer base, with sales figures showing significant increases across the board.
Furthermore, Coca-Cola's management is continuously looking for new ways to drive further growth for the company, evidenced by its focus on adding more variety and flavor options to its existing product lineup. By keeping on top of market trends and new opportunities, Coca-Cola increases its chances of staying at the top of consumers' minds for years to come.
This focus on innovation has led to some exciting developments for the company, including its popular zero-sugar Coca-Cola drinks. Introducing new sizes, flavors and other versions of the sugar-free drink has helped Coca-Cola appeal to many customers who are pting for healthier drink options. With Coca-Cola's volume for Coca-Cola Zero Sugar increasing by 11% in the most recent quarter, it is clear the zero-sugar trend is still going strong.
Takeaway
For the above reasons, I believe Coca-Cola remains a great investment during times of volatility. It won't be making millionaires anymore, but its stability makes up for this in a time of unexpected market swings. It recently delivered stellar earnings, and the company is not stopping on the way to the fourth quarter. In addition, the beverage giant is a time-tested Dividend King. It has raised its dividend for 60 consecutive years. This is an extremely impressive history.
Coca-Cola is one of the most iconic brands in the world and has built up a huge moat around its business. The company has a huge amount of brand equity and is unlikely to lose its spot as one of the world's most valuable brands any time soon. Coca-Cola also has a wide geographic reach, selling products in over 200 countries. The company's global reach gives it significant advantages over its competitors. Coca-Cola also has a strong track record of innovation, launching new products and cutting out-of-favor products to keep profitability strong. Add in Coca-Cola's franchising business model, which relies on licensing production out to independent manufacturers, it's clear to see the company also has a focus on reducing its exposure to asset risks, which has greatly helped its stability over the years.
