COCA-COLA The Coca-Cola Company appears to
be shaking off the effects of the
pandemic. Last year’s revenue and profit
downturns were largely attributable to
weakness in away-from-home channels, as
the health crisis kept people away from
restaurants, theaters, and other public
venues. Overall, unit case volume declined
6% in 2020, but trends improved in each of
the first three months of 2021. (Note that
March-quarter revenue rose 5%, though
the increase was entirely attributable to
this year’s period including five more days
than the prior one.) In fact, aided by share
gains in both the at-home and away-fromhome markets, volumes for the month of
March were back to pre-pandemic levels.
Too, the rollout of vaccines and subsequent
easing in social-distancing measures ought
to support further improvement over the
rest of 2021. (Results for the June quarter
are scheduled to be released on July 21st.)
Overall, we look for full-year earnings to
rebound 10%, on a high single-digit increase in organic revenues.
Coke is preparing an initial public offering for one of its bottling groups.
The company owns a 67% stake in CocaCola Beverages Africa, which accounts for
40% of the Coca-Cola products sold on the
continent. This move is consistent with the
beverage giant’s broader strategy in recent
years to shift most of its bottling operations to independent bottlers. In fact, management’s initial plan was to refranchise
these operations, but those efforts were
halted in 2019. The timing of the IPO is
partly contingent on market conditions,
but should be finalized within the next 15
months.
This stock hasn’t displayed much fizz
of late. It is trading essentially where it
began the year, and we don’t envision any
catalysts lighting a fire under these
neutrally ranked shares in the near term.
Meanwhile, this equity’s above-average
dividend yield and top mark for Price
Stability will likely pique the interest of
conservative investors. Note, though, that
the company is currently in a tax dispute
with the U.S. government, and we have
some concerns that an unfavorable outcome in this matter would necessitate a
reduction in our projections for increases
in the payout for the 3 to 5 years ahead.
Robert M. Greene July 16, 2021
EARNINGS PER SHARE /
2017 1.91
2018 2.08
2019 2.11
2020 1.95
2021 2.15
