Because of how much the restaurant sector struggled during the pandemic, sales for Coca-Cola (KO 1.50%) were hurting as well. But the giant drink business has now posted nine straight quarters of year-over-year revenue gains, an extremely rare feat for such a mature and dominant enterprise. The stock, however, is down about 1% (as of this writing) over the past 12 months, while the S&P 500 is up 8%. 

At a current price-to-earnings ratio of 27, which is in line with the trailing three-year average valuation, does it make sense for investors to buy Coca-Cola right now? Let's take a closer look at what's going on with this top beverage stock. 

Strong financial results 

I mentioned earlier how Coca-Cola is experiencing strong momentum as of late. In the most recent quarter (Q1 2023 ended March 31), the company that's home to household brands like its namesake Coca-Cola drink, as well as Dasani, Powerade, and Simply Beverages (among others), posted revenue of $11 billion, good for a 5% jump compared to the year-earlier period. Diluted earnings per share increased 12% to $0.72. Both of these headline figures exceeded Wall Street analyst forecasts, which is always a positive thing for shareholders to see. What's more, the company registered a superb operating margin of nearly 31% during the quarter. 

One of the standout trends working in Coca-Cola's favor is its ability to raise prices. This isn't that surprising, as many businesses have implemented the same moves to combat higher expenses. Even with the company asking customers to pay more, unit case volume was up 3% globally. Management also highlighted the fact that Coca-Cola grew its share in the market for what it calls nonalcoholic ready-to-drink beverages. 

Focusing more on the bigger picture, Coca-Cola's total addressable market (TAM) doubled from 2017 and is now a whopping $1.3 trillion. The $4.9 billion acquisition of Costa Coffee in 2018 expanded the business into the coffee industry, which substantially boosted that TAM figure. Based on 2022 overall revenue of $43 billion, Coca-Cola commands a tiny 3% of its perceived opportunity. 

Amid the uncertain economic environment, Coca-Cola can be relied on as a safety play. If there is a recession in the near term, the business should likely do just fine, as the beverage products it sells aren't really exposed to demand trends that fluctuate. And this perspective shows in the leadership team's guidance, as CFO John Murphy said on the Q1 2023 earnings call that for the current year they expect "organic revenue growth of 7% to 8%, primarily led by price mix amid the ongoing inflationary environment." 

Benefiting income-seeking investors 

Over the past 10 years, Coca-Cola shares climbed just 46% (as of May 22), which significantly lags the S&P 500's 151% return. At first glance, that's discouraging for investors, especially those who choose to pick individual stocks. The whole point of doing this is to find winning investments that beat the broader index. 

However, I don't think it's all bad news. Coca-Cola is a longtime dividend payer, and its current yield is a healthy 3%. It's also worth mentioning that the company has increased its annual dividend for a whopping 60 consecutive years. There aren't that many businesses that have this kind of remarkable payout track record. 

Some investors might prioritize the dependable and low-risk nature of Coca-Cola for their portfolios. And the growing dividends can help, too. I'm thinking of those who are closer to retirement age and want a solid foundational stock to add to their portfolios. In this case, buying shares makes sense. It also helps to know that Warren Buffett's Berkshire Hathaway owns about 9% of the outstanding shares.

For me personally, though, I have no intention of scooping up Coca-Cola stock anytime soon. The low probability of shares beating the market over an extended time horizon makes the decision of avoiding the stock an easy one for me. And I'm sure this is also the case for other growth-minded investors.