The Coca-Cola Company (KO): Here’s Why This Stock Is So Refreshing Today

Investors are cheering a small profit beat from global beverage giant The Coca-Cola Company (NYSE:KO) today, and shares are up more than 5% in a rare pop for the slow-and-steady outperformer. Let’s dig into the details to find out why Wall Street is so excited about this century-plus stalwart’s prospects.

What the numbers tell us
Coke reported revenue and net income that both came in slightly below the year-ago quarter’s results. On the top line, Coke’s $11.04 billion in revenue fell short of 2012’s $11.14 billion, which the company blamed on currency exchange rates and two fewer days of reported sales than last year. Despite this weakness, Coca-Cola Company (NYSE:KO) beat analyst expectations of $10.97 billion in revenue. On the bottom line, Coke’s $1.75 billion in GAAP profit ($0.39 per share) dropped from last year’s $2.1 billion ($0.45 per share). However, adjusted earnings came in at $0.45 per share, a penny ahead of expectations. Here’s how Coca-Cola Company (NYSE:KO)’s earnings look on a longer scale:

Sources: Morningstar; Coca-Cola earnings report.

All this demonstrates is that Coke is enjoying the benefit of lowered expectations today. Its results have historically been cyclical (and those free-cash-flow numbers are cumulative over the course of a year), but there’s been very little change in the company’s reported revenue and earnings in recent years, 2010’s one-time gain notwithstanding. However, there were also some interesting breakdowns and analysis in the latest report, which might well account for some of today’s investor optimism.

What the future looks like
Coca-Cola Company (NYSE:KO) continues to grow internationally , but it posted 3% volume growth in the Americas compared to 5% in its international segment. Noncarbonated beverages are overtaking Coke’s flagship “sparkling” lines in growth, with 6% volume growth around the world for still beverages doubling the growth rate of carbonated drinks. Thailand (up 18%), India (up 8%), and Russia (up 8%) presented the strongest international opportunity, but Coca-Cola Company (NYSE:KO)’s Chinese business barely moved, finishing the quarter with a mere 1% gain. Chinese weakness was blamed on a slowing economy and lousy weather. Two Japanese brands, a bottled water and a green tea, are both billion-dollar moneymakers for Coke now, posting 22% growth and 13% year-over-year growth, respectively. In addition:

The Middle East and North Africa posted 30% volume growth (17% ex-acquisition).

European volume was essentially flat year-over-year.

North America was barely better than Europe with 1% year-over-year volume growth.

Latin America saw 4% volume growth.

India posted 30% volume growth on Coca-Cola brand (the flagship) sales.