Coca-Cola (KO) released earnings before the market opened on April 16. It was a slight beat, but exactly what the company needs to continue its run higher. Let's take a look at the company and the quarter.
Coca-Cola owns the most popular beverage brands in the world, including Coke, Diet Coke, Sprite, Fanta, Dasani, Vitamin Water, and Powerade. Overall, it owns a portfolio of over 3,500 beverages, 800 of which are low-calorie and no-calorie. Coca-Cola has shown that it is dedicated to the products that got it where it is, as well as producing new ones for the growing population of health-conscious people.
Results vs. Expectations
- Reported $0.46 earnings per share versus estimates of $0.45
- Revenue came in at $11.035 billion versus estimates of $10.943 billion
- First quarter worldwide case volume increased 4% versus estimates calling for a 3.1% increase
- Case volume up 1% in North America versus estimates for just 0.6%
These are beats on just about every important piece of data analysts put out. A 4% increase in worldwide case volume is incredible for a company of this size, but it just shows how loved the brand is. Sales in Germany actually increased 3%, so the European issues are not present when it comes to Coca-Cola's products.
Coca-Cola pays out an annual dividend of $1.12, or 2.79%. This is a good yield, but the fact that the company has raised its payout for 50 consecutive years makes the dividend much more valuable. This is because investors know it will continue to grow and provide a cushion in bear market times. The consistency shows that management is dedicated to returning value to its investors, a key quality I look for.
Prior to the market open on April 16, Coca-Cola has gained 6.62% year-to-date. It has vastly underperformed its top competitor, Pepsi (PEP), which is up 13.83%. Pepsi has been running off strong earnings reports, so stringing together a few strong quarters may be all Coca-Cola needs.
Since the earnings were released right around 7:30 am, Coca-Cola has $1.16 in pre-market trading. This is an increase of about 2.9%. These gains should hold and continue to grow throughout the trading day.
The bottom line
Coca-Cola is one of the most recognizable brands in the world and its earnings continue to reflect this popularity. It has beat on first quarter earnings and I expect management to give positive guidance going forward. I also hope to see analyst upgrades in the next few days. Coca-Cola is still a buyable stock, but I would wait for the first sign of weakness to start a position.