- Coca-Cola reported a solid set of financial results for the third quarter of 2023, beating market estimates and raising full-year guidance. this was despite the drag caused by strong dollar headwinds that impacted other multinational companies.
- The group CFO, John Murphy, dispelled the market’s concern that weight loss drugs have affected sales, stating that the diversity of beverage options is in line with changing consumer preferences, with 68% of Coke’s products being low-calorie or zero-calorie options.
- The resilience of the group’s operating model is reflected in organic (Non-GAAP) revenue growth of 11%, reaching $11.95 billion, surpassing market estimates of $11.4 billion, with net revenues up by 8% and operating income increasing by 6%. Operating margins remained steady at 27.4% compared to a prior 27.9%, despite the challenging and volatile environment.
- Coke earned $0.74 per share in the third quarter, surpassing the market estimate of $0.69 per share, with strong cash flows from operations of $8.9 billion year-to-date, an increase of $861 million compared to the prior year. This was due to the strong operating performance of the company’s brands, which encompass over 200 beverages, including sodas, coffees, and waters. This performance was also driven by new product innovation and marketing. With events like the FIFA Women’s World Cup in 2023, there are expected benefits for both Coke and Powerade.
- The company expects organic growth of 10%-11% for the year ending in December 2023, up from the prior guidance of 8%-9%, which implies EPS growth of 7%-8% compared to the previous 5%-6%.
- Some multinational staples companies have seen volumes decline once prices have been increased, but this does not appear to be the case with Coke thus far.
- I am a long-term investor in Coke shares in my segregated offshore portfolios. At the current price of $55.70, it is an attractive entry point, with a P/E ratio of 22X compared to the previous P/E ratio of 30X and a dividend yield of 3.50%.
By Ron Klipin
Join our Mailing list!
Sign up to get all the latest financial news and business updates.
Sign up to get all the latest financial news and business updates.