Coca-Cola (NYSE:KO) traded higher on Tuesday after sailing past organic sales expectations with a 6% rise in Q3.
Notably, the solid results point to Coca-Cola (NYSE:KO) gaining market share due to its widening portfolio of beverages, including sugar-free soda, sports drinks, and water. During Q3, Coca-Cola Zero Sugar sales rose 14%, driven by growth across all regions, the company said.
“There’s more and more focus on people wanting to live a healthier, more balanced lifestyle, and Coke Zero, Diet Coke, etc. fits more into that equation,” highlighted Chief Financial Officer John Murphyin a media interview Tuesday morning.
J.P. Morgan analyst Andrea Texeira noted that the 6% organic sales mark follows Coca-Cola (KO) posting 5% organic sales growth in Q2 and 6% in Q1, which stands out in the consumer packaged goods sector.
BNP Paribas Kevin Grundy highlighted that despite some worry among investors that Coca-Cola (KO) may point its guidance to the low end of its existing range, management reaffirmed key FY25 guidance points after the better-than-expected Q3 results. “Also, of note this morning, KO advanced its global refranchising efforts with the sale of controlling stake of Coca-Cola Beverages Africa (CCBA) to CCH, which comes as little surprise and marks the completion of multi-year effort for this asset. KO remains a preferred core holding in our HPC & Beverages coverage,” updated Grundy.
TD Cowen analyst Robert Moskow said the Q3 earnings report could ease concerns about weaker macroeconomic conditions. “We view 3Q as further proof the company can achieve growth algorithm with earnings flexibility,” advised Moskow.
Wells Fargo analyst Chris Carey said Coca-Cola’s (KO) organic sales beat should re-build confidence the beverage giant can work through dynamic backdrops while still achieving its objectives.
On Seeking Alpha, analyst Julia Ostian noted that Coca-Cola (KO) once again delivered strong results, as expected from a high-quality company. However, she highlighted the underperformance of KO vs. the S&P 500 Index this year. “That gap perfectly shows why I still don’t think this is a great moment to enter the stock. The business is excellent, but the valuation leaves little upside,” reasoned Ostian. “For long-term holders who’ve owned KO for 20 or 25 years, there’s no reason to sell – it’s still a solid, reliable dividend name. But for new investors, I simply see far better opportunities on the market right now,” added Ostian.
The ETFs with the highest weighting of Coca-Cola (KO) in their portfolio are the iShares US Consumer Staples ETF (IYK), the Global X Purecap MSCI Consumer Staples ETF (GXPS), and the Vanguard Consumer Staples Index Fund ETF Shares (VDC).
Shares of Coca-Cola (KO) were up 3.7% at 10:00 a.m. to $70.99. The 52-week high for the stock is $74.38.