Coca-Cola (NYSE: KO) Stock a Sweet Deal for Investors

Coca-Cola (NYSE: KO) stock has climbed about 10% in the past year - and its earnings report delivered today (Tuesday) shows it's unlikely to stop.

Coca-Cola Stock Price History
(NYSE: KO)

The beverage company reported better-than-expected first-quarter earnings Tuesday morning. The company's worldwide volume and sales continues to grow, and it persists in its efforts to cut costs and use its global presence to take advantage of lower commodities prices globally.

The company's outlook remains solid, and Coca-Cola is still the leader in the soft drink industry.

"Coca-Cola's volume growth was very strong this quarter and despite commodity pressures and clear marketing reinvestment, they delivered strong profitability," Ali Dibadj, an analyst for Sanford C. Bernstein & Co. in New York, said in an e-mail to Bloomberg News following Coke's earnings. Dibadj rates Coca-Cola an "Outperform."

Investors should consider gulping down Coca-Cola's stock to add some fizz to their portfolios.

Coca-Cola (NYSE: KO): Refreshing Earnings

Coca-Cola reported a quarterly profit of $2.05 billion, or 89 cents a share. That was an increase from the $1.9 billion or 82 cents reported in the same period a year ago.

Analysts had been looking for 87 cents on revenue of $10.82 billion, according to Thomson Reuters.

Revenue increased 5.9% to $11.14 billion. Gross margins fell a tad to 61% from 62.5% due to higher input costs.

CEO Muhtar Kent said in a conference call after the earnings release, "Despite a continued mixed global environment, our hard working teams achieved broad-based volume and value share gains in nonalcoholic ready-to-drink beverages globally, with volume growth across every geographic operating group and revenue growth ahead of our long-term growth target."

Growth in developed markets wasn't as healthy as in emerging markets, but still rose. Sales volume climbed 6% in Spain, 3% in Germany and Japan, and 1% in the United States.

"That's an interesting message for us, not just for Coke but more broadly for consumer packaged goods," Dibadj said. "I don't think the U.S. is back to what it used to be, in terms of growth, but this would suggest that things are getting a little bit better."

Globally, Coca-Cola is the number one provider worldwide of sparkling beverages, ready-to-drink coffees, juices and juice drinks. It's the company behind Coke, Diet Coke, Fanta, Sprite, Minute Maid orange juice, no-calorie VitaminWater, Dasani and Powerade.

Consumers around the world enjoy Coca-Cola beverages at an astounding rate of more than 1.7 billion servings a day.

Sales in North America have been tested by an ailing economy and tight pocketbooks, but Coca-Cola, which has sales in more than 200 countries, has seen soft drink receipts steadily grow in developing markets such as China, India and Russia.

NYSE: KO Stock Can Thrive

The future is not void of challenges. The company faces rising competition from generic alternatives and is always working to fend off traditional foes like Pepsi. In addition, initiatives aimed against sugary and acidic beverages will challenge Coke as cultures, especially in the United States, fight the ballooning epidemic of obesity.

But Coca-Cola is positioning itself for a shift in habits and tastes.

Coke recognized years ago that man does not live on cola alone and has since continued to expand beyond soda. It has added a collection of beverages that cater to health and sports conscious consumers. In fact, the Atlanta, GA-based company's North American volume increase was attributed to its bottled waters Dasani and VitaminWater, and its energy drink line of Powerade.

It has introduced smaller packaging sizes to entice consumers concerned with price and health.

The company also capitalized on foreign exchange rates to help offset the rising costs for raw materials used to make its iconic bottles and the corn used in sweeteners. The company's cost-cutting measures to offset rising commodities costs are paying off, and Coca-Cola is on track to save $550 million to $650 million annually by 2015.

While enjoying a solid rise in world-wide volume in recent years, the company is stepping up marketing to bring even more attention to its highly recognizable brands.

For investors, Coca-Cola knows how to sweeten the deal. It has a history of rewarding shareholders with steady dividend increases. Shares currently pay 51 cents a share quarterly for a 2.76% yield, making Coca-Cola among the highest yielding big-cap stocks.

In addition, the company continues to buy back shares.

Coca-Cola stock hit a new 52-week high Tuesday. KO was trading about 2.73% higher by 2 p.m. Tuesday to $74.42.

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