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Coca-Cola stock is moving to the upside after posting impressive earnings and revenue for its second quarter.
- Welcome back, everyone. It is time for Triple Play. And I'm going to kick us off with my pick, which is Coca-Cola, ticker symbol KO.
Now, the beverage giant actually enjoyed a second quarter earnings and revenue beat. And that was driven by price increases and higher underlying volumes, not just in the US but also globally, really showing that people are still willing to spend on consumer products they just love. As you can see there, the earnings and revenue they're beating.
And you see the stock is still in positive territory, up just about 2%. Now, it was actually that full year guidance that everyone's been watching for this earnings season that was also raised, organic revenue growth of 12% to 13% now, versus the prior 7% to 8% prediction.
Now, CEO James Quincey said the results, quote, "reflect the agility of our business, the strength of our streamlined portfolio of brands, and the actions we've taken to execute for growth in the face of challenges in the operating and macroeconomic environment." And that's actually in line with Morgan Stanley analysts. And they see beverages as a preferred sector and among the safest places for investors to put their money right now. Now, that's due to pricing power, post-COVID, recovery and the competitive landscape there.
Now, they also expect sales to recover, especially with more people returning to where you see a lot of Coke products available-- movie theaters, restaurants, sporting events. Operating margins, though, showing it's still being affected by inflation, supply chain issues, and of course, these currency headwinds that we've been keeping an eye on.
- It certainly is a long list of potential headwinds here for Coca-Cola. You mentioned some comments from CEO James Quincey. He also went on to say that he is watching consumer behavior, because it will likely be a challenging couple of months or potentially couple of quarters here, not only for Coca-Cola, but for across all industries, as we do see this economic slowdown.
And Coca-Cola, it's interesting because they usually fare OK at the start of a recession. But if it's a prolonged slowdown, that's, of course, where Coca-Cola, its competitor Pepsi, those types of names could potentially see a larger pullback as consumers aren't as willing to spend.