Coca-Cola (NYSE: KO) has been around for a long time — 140 years — and is about as familiar as it gets. It’s a classic blue chip stock, providing stability, reliable profits, and even a great dividend. Those are traits that investors appreciate, but they’re nothing that generates a jaw-dropping moment.
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The global beverage giant will report third-quarter earnings on Oct. 27, and I think the stage is set for Coca-Cola to remind investors that there’s nothing wrong with bubbles — as long as they’re in carbonated drinks that are loved around the world.
Coca-Cola stock trades up about 33% so far this year, and after raising its full-year guidance in July, I think another strong earnings report could send Coca-Cola stock higher.
Coca-Cola’s business is picking up steam
Coca-Cola is proving that its line of beverages, which includes soft drinks, coffee, tea, sports drinks, water, dairy products, and juices, is growing in popularity — and adding to the company’s bottom line.
In the second quarter, Coca-Cola reported $13.4 billion in revenue, up 7% from a year ago. And global unit case volume, a measure of beverage sales, increased by 5%. In short, consumers are actually buying more products, rather than the company simply charging more for the same amount of soda.
Coca-Cola Zero Sugar volume increased 16%, while sports drinks, water, and tea all recorded gains. The company also gained market share in the global nonalcoholic ready-to-drink beverage market.
Those results helped Coca-Cola record adjusted earnings per share of $0.97, up 11% from a year ago.
The global strategy delivers results
Coca-Cola has another advantage that investors shouldn’t overlook — its international distribution network. In Q2, it used the FIFA World Cup to promote its brands in more than 180 markets. Coca-Cola says the campaign contributed to 5% volume growth for its flagship brand and 8% for Powerade.
It’s also adapting products to local preferences, including lemon-flavored Sprite+Tea in China and expanding Coca-Cola Zero into additional international markets. Unit case volume was up 8% in Asia Pacific during the second quarter, while North America and Latin America were both up 3%.
