Shares of Coca-Cola (KO) were up 2.6% as of 11:24 a.m. ET on Tuesday after reporting solid revenue and earnings growth for the third quarter.
The maker of Sprite and Powerade posted strong growth in unit case volume in Latin America, which, combined with higher selling prices across operating segments, drove an 11% year-over-year increase in organic (non-generally accepted accounting principles, or non-GAAP) revenue and comparable earnings per share on a currency-neutral basis.
The stock hasn't delivered huge returns, but strong sales growth should continue to support an above-average dividend yield.
Why Investors Loved Coca-Cola's Third-Quarter Earnings Report
Worries over macro headwinds impacting consumer spending had sent the stock down heading into the earnings report, so investors had low expectations, which the company exceeded.
To top it off, management raised its full-year outlook. The company expects adjusted organic revenue to increase 10% to 11% over 2022. Improving margins should lift adjusted earnings per share (excluding currency changes) up 13% to 14% year over year.
Some markets, such as Latin America, India, and parts of Asia, are showing strength, while others are mixed. Overall, Coca-Cola's brand is proving resilient so far, and management is doing a good job of controlling costs to deliver solid bottom-line growth.
Is Coca-Cola Stock a Buy?
Coca-Cola is using the diversity of its product portfolio and successful marketing tactics to deliver solid growth in a challenging macro environment. For example, it offset weak consumer spending in Europe by gaining market share in sparkling soft drinks and tea. Coca-Cola also reported promising early results with its partnership with Brown-Forman to offer a ready-made Jack & Coke alcoholic drink.
Overall, Coca-Cola is on more solid footing than the recent share price dip would suggest. Investors looking to boost their portfolio's income might find Coke a good option since the lower share price has pushed the dividend yield up to an attractive 3.28%.
