About Coca Cola

Coca-Cola is a company that manufactures, markets and sells soft drinks, which include sparkling soft drinks, water, flavored water and sports drinks, juices, as well as dairy and plant-based beverages, and tea, coffee and energy drinks. The company operates in the following geographic segments: Europe, Middle East and Africa, Latin America, North America, Asia Pacific. The company was founded by Asa Griggs Candler in 1886 and is headquartered in Atlanta, GA.

Increases prices and sales volume

The good news is that the company's steady growth over the past quarter was due to a combination of factors, such as product price increases as well as higher sales volumes. Compared to last quarter, this was a difference in strategy where the company relied solely on price increases as sales volumes stagnated.

Coca Cola was able to gain market share thanks to solid sales of key brands, including Coke Zero, Sprite and Fanta. Non-traditional beverages that are popular with consumers, including bottled water, sports drinks and energy drinks, experienced faster growth. If Coca Cola wants to maintain its positive growth momentum over the long term, it must continue to make progress in both of these areas.

Sharing the wealth

Coca Cola's impressive product range generates a lot of free cash flow (FCF). For the first three quarters of the year, Coca-Cola's FCF was up to $7.9 billion. And the company likes to share that wealth through regular dividend payments and share buybacks. This year, it spent $1.2 billion on share buybacks. The company also paid out $4.1 billion in dividends.[1]  The company's board of directors considers dividends so important that it has raised them for 61 consecutive years. That makes Coca-Cola part of a club called the Weighted Dividend Kings, an event that has increased dividend payments every year for at least half a century. Coca-Cola shares enjoy a dividend yield of 3.1%, more than double the 1.5% average of the S&P 500.[2]

Impressive financial results

The beverage giant recently raised its 2023 outlook for the second consecutive quarter. Profits remain strong even as consumer spending patterns change and market share grows, despite Coca Cola's already dominant position in the "to-go" beverage space.

For the first nine months of the year, Coca-Cola's adjusted earnings, which exclude foreign currency translation and acquisitions/sales, rose 11 per cent. However, the majority - 10 per cent - came from higher prices and product mix. The company continued its trend of increasing earnings, with earnings per share up 14 percent.

Coca Cola's share price evolution over the last 5 years. Source.*

Conclusion:

With Coca Cola's above-average valuation, reliable free cash flow, and history of higher dividends, income-oriented investors may consider buying Coca-Cola stock. If they're looking for a company with rapid growth, investors will find better opportunities elsewhere. [1]

Adam Austera, principal analyst at Ozios

* Past performance is no guarantee of future results

[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate or based on the current economic environment, which may change. Such statements are not guarantees of future results. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied by any forward-looking statements.

[1] https://www.tradingview.com/news/mtnewswires.com:20231120:A3030248:0/

[2] https://www.tradingview.com/news/zacks:489d2bc72094b:0-cocacola-company-the-ko-is-a-trending-stock-facts-to-know-before-betting-on-it/