Why Coca-Cola Shares Are Popping

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Coca-Cola Co. (NYSE: KO) released its fourth-quarter financial results before the markets opened on Friday. The company said that it had $0.39 in earnings per share (EPS) on $7.51 billion in revenue, which compares with consensus estimates from Thomson Reuters of $0.39 in EPS on revenue of $7.36 billion. In the same period of last year, the company said it had EPS of $0.37 and $9.38 billion in revenue.

As a result of the recent tax reform, the firm noted a one-time net charge of $3.6 billion for the quarter, consisting of a repatriation charge of $4.6 billion and a deferred tax benefit of $1.0 billion.

During the quarter, organic revenues grew 6% driven by price/mix growth of 4% and concentrate sales growth of 1%. At the same time, total unit case volume was even for the quarter and full year. Developing and emerging markets generated positive volume growth for the second consecutive quarter, including volume growth in Brazil. While volume growth in developed markets overall was even during the quarter, North America volume grew 1%.

In January 2018, Coca-Cola announced new sustainable packaging goals to lead the industry in addressing the issue of packaging waste. One of these goals is to help collect and recycle a bottle or can for every one it sells by 2030, effectively bringing back the equivalent of 100% of its packaging.

In terms of the outlook for the 2018 full year, the company expects to see EPS growth in the range of 8% to 10% and revenue growth of 4%. The consensus estimates call for $2.01 in EPS on $30.97 billion in revenue for the year.

James Quincey, president and CEO, commented:

The Company also achieved major milestones in strengthening the system and returning to a capital-light organization, including a fully refranchised bottling system in the United States. Outside of the U.S., the Company refranchised previously owned bottling operations in China to local partners. The system’s two largest bottlers in Japan merged, creating a single bottler covering the vast majority of volume in that key market. Additionally, the Company completed the ownership transition of bottling operations in Africa, temporarily acquiring majority ownership of Coca-Cola Beverages Africa until it is refranchised.

Shares of Coke closed Thursday at $44.78, with a consensus analyst price target of $49.87 and a 52-week trading range of $41.05 to $48.62. Following the announcement, the stock was up nearly 3% at $46.05 in early indications Friday.

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