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Why Coca-Cola Consolidated Stock Jumped 14% This Week

By Demitri Kalogeropoulos – Nov 12, 2021 at 7:43AM

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Soda prices are rising.

What happened

Coca-Cola Consolidated (COKE 0.89%) shareholders beat the market this week, as shares rose 14% through late trading on Thursday. The bottler announced solid earnings results despite supply-chain and cost challenges.

So what

Sales rose 10% in the fiscal third quarter, which ended in early October. That boost marked a modest slowdown, compared to the prior-quarter's 17% spike. It was powered by higher prices, which were offset by a slight decline in bottling volumes.

A smiling person drinking a soda.

Image source: Getty Images.

The bottling giant enjoyed a big profitability boost from the combination of higher prices and reduced costs, too. Operating income jumped 32% in the period and is up 60% since the start of the year, management revealed in a filing with the SEC. "Our results through the first nine months of 2021," CEO Frank Harrison said, "reflect a strong balance of volume growth, price realization and prudent expense management."

Now what

The company still faces major cost and supply-chain challenges for late 2021 and beyond. The industry is struggling with labor shortages today, for example, that pressure manufacturing and delivery rates.

However, it's clear from this report that Coca-Cola Consolidated can pass along increased costs for raw materials like aluminum to customers without sacrificing much in the way of sales volumes. As a result, investors are becoming more confident in the bottler's ability to navigate through this challenging selling environment while maintaining solid growth rates in both revenue and earnings.

That's good news for shareholders, especially given the prospect for accelerating volume growth as the pandemic threat wanes in key markets though 2022.

Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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