Coca-Cola Stock Works Its Magic Once Again

The Coca-Cola Co (NYSE: KO) once again demonstrated its ability to masterfully navigate a difficult environment and deliver earnings and revenue numbers that beat Wall Street expectations. Despite ongoing weakness in the North American beverage sales environment, Coca-Cola relied on pricing power and new products to drive its business in the fourth quarter.

On Friday, Coca-Cola reported adjusted earnings per share of 39 cents on revenue of $7.51 billion. Both numbers topped consensus analyst estimates of 38 cents and $7.37 billion, respectively.

Perhaps most impressive was Coca-Cola’s organic sales growth of 6 percent. Analysts had been expecting 3.6 percent organic growth.

Coca-Cola says it took a $3.6 billion one-time charge as a result of U.S. tax reform.

Coca-Cola’s impressive top- and bottom-line numbers came in quarter in which beverage volume growth was flat. Revenue was down 20 percent from a year ago due to the company’s efforts to divest much of its bottling businesses to streamline its operations.

CEO James Quincey says Coca-Cola will eliminate $800 million in costs. “While there is still much work to do, I am encouraged by our momentum as we head into 2018,” Quincey says in a statement.

Coca-Cola has acquired several non-soda beverage companies in recent months, including Honest Tea and Fairlife dairy. Quincey has also refocused the compay’s efforts on diet drinks, adding four new Diet Coke flavors and relaunching Coke Zero with a new formula.

Looking ahead to 2018, Coca-Cola guided for EPS growth of between $2.07 and $2.10, implying up to 10 percent growth.

Wells Fargo analyst Bonnie Herzog says the latest quarter is more evidence Coke is making all the right moves to overcome stagnant volume growth. “Coca-Cola continues to do a good job driving relevancy with consumers and leveraging innovation and mix to drive solid pricing growth,” Herzog said on Friday, according to CNBC.

Coca-Cola stock initially traded higher by 1 percent following the report, and Bank of America analyst Bryan Spillane says long-term investors should love what they saw on Friday morning.

“Today’s results were supportive our buy rating, which is predicated on KO successful transformation to a total beverage company which should yield consistent organic sales growth and attractive margins and returns,” Spillane says.

In addition to the “buy” rating, Bank of America has…

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