Buy KO?
Though the stock trades close to its 52-week average, the valuation looks fair considering the company’s strong earnings and resilience to adversities. It is one of the safest growth stocks, with the potential to create strong shareholder value. Moreover, the company raises its dividend at regular intervals – the latest dividend of $0.44 per share translates into a yield of 2.8%, which is well above the S&P 500 average. The stock is a good bet because it is poised to hit new highs in the coming months, in line with the long-term trend.
Brand Power
North America continues to be the largest market for the company’s products, with sales growing in double digits in recent quarters. People buy Coca-Cola’s products as a habit, irrespective of the health of their personal finances. This allows it to raise prices whenever required, without affecting sales. Also, customers have responded positively to the company’s innovative moves like the launch of healthier, sugar-free products.
The Coca-Cola Company Q3 2022 Earnings Call Transcript
During an interaction with analysts a few months ago, Coca-Cola’s CEO James Quincey said, “as we look forward beyond this year, we continue to see great opportunity for our industry. We are allocating resources in a disciplined way to gain a share. Success from our marketing model is based on two critical components, linking occasions and passion points to drive engagement and leveraging experiments to optimize our marketing. This drives deeper connections with consumers reaching them in new and unique ways.”
Key Numbers
Coca-Cola enjoys the rare distinction of generating quarterly earnings that either beat or matched expectations consistently for more than five years. In the third quarter of 2022, adjusted profit moved up 7% annually to $0.69 per share, helped by a 10% growth in revenues to about $11 billion. Shrugging off the pandemic blues, sales increased steadily during the COVID period and surpassed analysts’ forecasts quite often.
When the company reports fourth-quarter results on February 14, the market will be looking for earnings of $0.45 per share on revenues of $9.98 billion. The stock experienced weakness in the final days of 2022 and hovered near the $ 60 mark. KO traded lower most of Wednesday’s session, after losing about 5% since the beginning of the year.