Coca-Cola stock: Time to buy?

As the beverage giant reports an increase in earnings, this may be the time to grab its shares.

By TheStreet Staff Oct 19, 2010 12:19PM

Credit: (©Jeff Chiu/AP)
Caption: Coca-Cola bottlesBy Andrea Tse, TheStreet

 

Coca-Cola (KO) reported an increase in third-quarter earnings amid solid volume growth.

 

The company said net income attributable to shareholders of the Coca-Cola Co. increased by 8% to $2.055 billion, or 88 cents a share, from $1.896 billion, or 81 cents, a year earlier.

 

Shares of Coca-Cola were rising 0.5% to $60.32 in midday trading.

 

Net operating revenue rose by 5% to $8.426 billion from $8.044 billion as volume increased 5% in the quarter, and it was especially pronounced in the international markets.

Still, Stifel Nicolaus anlayst Mark Swartzberg noted in an equity research report that "Mexico, which was flat in the quarter, is our number one area of focus or concern as a laggard in the company's larger track record of growth."

 

He also noted that the quarter included a 7% concentrate increase that "drives revenue -- compared to a unit volume increase of 5% . . . implying third-quarter EPS benefited from the concentrate increase."

 

Overall, Swartzberg continues to view Coca-Cola shares as attractive.

 

On average, analysts expected earnings of 89 cents on revenue of $8.3 billion.

 

There were no share repurchases during the first three quarters of the year because of Coca-Cola's bottling transaction with Coca-Cola Enterprises (CCE), which was completed after the close of the third quarter.

 

Coca-Cola expects to repurchase about $2 billion in shares by the end of the year.

 

Barclays Capital's Michael Branca told investors in a note that he thinks the earnings results are a "clear positive for" Coca-Cola. "We would expect the stock to very quickly march up to the top of our $58-to-$64 trading range," he said.

 

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