The Coca-Cola Co (NYSE: KO) once again delivered an impressive set of quarterly numbers in a difficult competitive environment, beating Wall Street expectations in the first quarter on both revenue and earnings. The North American beverage sales environment has stagnated in recent quarters, but pricing power and a big relaunch of Diet Coke helped Coca-Cola put together yet another solid quarter.
On Tuesday, Coca-Cola reported adjusted earnings per share of 47 cents on revenue of $7.6 billion. Both numbers topped consensus analyst estimates of 46 cents and $7.3 billion, respectively. Revenue was down 16 percent from a year ago as Coca-Cola continues its bottler refranchising efforts.
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The Diet Coke relaunch appears to have been a success, bringing its North American volume growth back into positive territory.
Organic sales were up 5 percent on the quarter, down from 6 percent in the previous quarter. Operating margins expanded by 2.2 percent.
Pricing was up 1 percent on the quarter, and unit case volume was up 3 percent. Sparkling soft drinks volume was up 4 percent, while tea and water volume was up 5 percent.
Europe, the Middle East and Africa unit case volume was up 4 percent in the first quarter. North American unit case volume was up 2 percent.
Coca-Cola reported $613 million in cash from operations. Free cash flow on the quarter was $339 million, up 5 percent from a year ago.
Coca-Cola also reported $471 million of net stock repurchases in the first quarter.
“We’re encouraged with our first quarter performance as we continue our evolution as a consumer-centric, total beverage company,” CEO James Quincey says in a statement. “We have the right strategies in place and remain confident in our ability to achieve our full-year guidance.”
Last quarter, Coca-Cola guided for 2018 EPS of between $2.07 and $2.10, implying 8 to 10 percent earnings growth this year.
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Bank of America analyst Bryan Spillane says Coca-Cola’s quarter was impressive. “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,” he says.
Coca-Cola stock initially traded higher by 1.5 percent on Tuesday morning.
In addition to the “buy” rating, Bank of America has a $52 price target for KO stock.
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Diet Coke Drives Earnings for the Coca-Cola Co (KO) originally appeared on usnews.com
