Coca-Cola stock pops as earnings top estimates amid ‘challenging’ environment
Coca-Cola (KO) posted earnings that beat Wall Street’s expectations on Tuesday, continuing an early streak of strong third quarter reports from consumer-facing companies.
Adjusted earnings came in at $0.82 per share, compared to Wall Street estimates of $0.78, according to Bloomberg data. Organic revenue grew 6%, slightly higher than analyst estimates.
“While the overall environment has continued to be challenging, we’ve stayed flexible — adapting plans where needed and investing for growth,” chairman and CEO James Quincey said in a statement.
He later added on an earnings call: “While many consumers remain in overall good shape, certain segments of the population are under pressure due to varying factors.”
The stock popped more than 3% in Turesday trading.
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Coca-Cola’s global unit volume grew 1%, compared to a 0.75% increase expected. That’s still lower than the 4% increase the metric saw in third quarter of 2022 — the last time global unit volume grew.
In Europe, the Middle East, and Africa, unit case volume jumped 4% but was flat in both North America and Latin America. The company’s Asia Pacific segment saw volume decline by 1%. A standout in the quarter was its Coca-Cola Zero Sugar option, which grew 14% and saw growth across all regions.
Other areas showed signs of weakness. Juice, value-added dairy, and plant-based beverages saw volume drop 3%. The company said it saw growth in Latin America, but this was offset by a decline in Asia.
CFO John Murphy told Yahoo Finance that its protein beverage category, like Fair Life and Core Power, is “on fire.” The company is currently building a plant in update New York, with more plans to invest in the future.
“We see more investments on the horizon. We’re keen to get the Webster plant up and running as fast as possible, it will be … the largest investment that we’ve ever made in a single production facility,” Murphy said, adding the team “has a very exciting innovation pipeline.”
The company’s water business grew 3% by volume, boosted by all regions, while North America was the primary driver behind sports drink volume, up 3% globally. Trademark Coca-Cola saw volumes decline in the US.
Similar to what others have emphasized this quarter, Coca-Cola said it is seeing high-income earners who have been able to spend, while middle- and lower-income consumers are under pressure and seeking value.
Murphy believes high-income consumers are “more resilient,” but said the company is “very focused” on watching the low-income consumer over the next few weeks and months.
