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Why Coca-Cola Is an 'Unbeatable Business'


The soft-drink giant is well-positioned for continued growth despite weaker-than-expected third-quarter sales numbers.

Earnings rose 4%, to $2.33 billion, or $0.50 a share, from $2.25 billion, or $0.48. Excluding one-time items, the company earned $0.51 a share, down from $0.52. That matched the consensus estimate. Coke also said that unfavorable exchange rates held back its operating income by 7% in the quarter. The company's gross margin rose to 60.7% from 60.2% a year ago.

Coca-Cola Products Are Market Leaders

Despite the sales miss, the company saw higher sales volumes across all its divisions, led by Eurasia and Africa, where volumes rose 11%.
India continues to be a growth area for Coca-Cola. The company saw overall volumes rise 15% in the country in the latest quarter, with its main Coca-Cola brand posting a 34% increase. Sprite gained 15%. The company said its Indian growth is balanced across all of its package sizes. It also sold more juices and juice drinks, such as Minute Maid Pulpy and Maaza.

The company's Indian unit now controls 25% of the country's soft drink market, ahead of PepsiCo's 20% share. Domestic soft-drink maker Parle Bisleri also has a 25% stake.

Coke now plans to invest $5 billion in the country by 2020. The company will to use this cash to expand its distribution networks, introduce new products and increase its manufacturing capacity. That will help it better attract consumers as India's middle class keeps growing.

Coca-Cola Is Sharing Its Success With Shareholders

Not to be overlooked is the company's long history of returning capital to shareholders, both through reliable dividends and share repurchases. Coca-Cola is also one of America's most reliable dividend-paying stocks. The company has paid dividends for 82 consecutive years-since 1920-and has raised its payout every year for the past 50 years. The current annual rate of $1.02 a share yields 2.69% on a yearly basis.

The company's ongoing share repurchase plan is another often-overlooked benefit. Coke has spent $2.5 billion on buybacks through the first three quarters of the year.

This article by Chad Fraser was originally published on Investing Daily.

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