Coca-Cola: Decent Quarter Confirms Long-Term Investment Thesis

| About: The Coca-Cola (KO)

Shares of The Coca-Cola Company (KO) rose 1.5% after the global beverage company reported a decent second quarter earnings report yesterday.

Second Quarter Results

Coca-Cola reported 3% revenue growth to $13.1 billion for the second quarter of 2012. The company reported an unchanged net profit of $2.8 billion. Diluted earnings per share rose by one cent to $1.21 per share. The company reported a 4% growth in global beverage volumes. While the growth rate appears rather low, the strong dollar had a unfavorable effect of 4% on total revenues.

CEO Kent commented on the results, "we are pleased with our second quarter and year-to-date results. We are delivering consistent quality performance in line with our 2020 Vision growth targets, despite a very challenging and increasingly unpredictable global economy."

Developed Markets

Coca-Cola reported solid volume growth over the most recent quarter in developed economies, including North America (+1%), Germany (+1%) and Japan (+4%). Performance in Central and Southern Europe was soft, with volumes down 5% on the year on the back of the harsh economic circumstances and bad weather.

Emerging Markets

The company reported strong volume growth in emerging markets, including Brazil (+6%), China (+7%), Russia (+9%) and India (+20%).

Sparkling beverage volumes grew by 3% on the year with strong growth in emerging markets. Still beverages grew an incredible 9% driven by strong volume growth of 13% in ready-to-drink tea and a 21% growth in energy drinks.

Investment Thesis

So far this year Coca-Cola repurchased approximately $1.6 billion of its own shares. The company expects to repurchase between $900 million and $1.4 billion of its own shares in the second half of 2012. Year to date, Coca-Cola earned $2.11 per share which is up 4% compared to 2011 and places the firm on track to earn $4 per share for the full year. Additionally, the company aims to realize between $550 million and $650 million in annual savings by taking productivity and cost measures. The company aims to achieve these annual savings in full by 2015.

Investors in Coca-Cola had a decent year so far. Since January 2012, shares of the company have returned approximately 11%. Furthermore, investors receive quarterly dividends of $0.51 per share, for an annual dividend yield of 2.6%. Coca-Cola reported yet another strong earnings report, partially hidden by the adverse currency effects as a result of a strong dollar. Irrelevant of the short-term dollar movements, Coca-Cola provides investors with an attractive, truly global investment opportunity at 19 times earnings, while offering a decent dividend yield.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.