Tags: Coca-Cola | KO | soft-drink | soda | cola | berkshire | buffett

Coca-Cola Stock: It’s the Real Thing

By    |   Wednesday, 11 May 2011 01:24 PM

Coca-Cola (KO), the world’s largest soft-drink maker, could be run by a ham sandwich, investment legend Warren Buffett has famously said. Buffett should know. The billionaire’s Berkshire Hathaway (BRK.B) holding company owned $13.47 billion, or 8.7 percent, of the company’s stock as of Dec. 31.

What he meant is that with Coke’s direct distribution network around the world and a product desired by consumers in every corner of the globe, the company is a sure thing. It turns out that not only could a ham sandwich run it, but current CEO Muhtar Kent isn’t doing so badly either.

"It's the day-to-day execution that really counts for Coke," Caroline Levy, a stock analyst at Credit Agricole, tells The London Telegraph. "They've got strong leadership in place."

Coke profit registered $1.9 billion in the first quarter, up from 18 percent from $1.61 billion a year earlier. Revenue jumped 40 percent to $10.52 billion, helped by last year's acquisition of Coca-Cola Enterprises’ North American bottlers.

The earnings performance would have been even better if not for revenue lost due to Japan’s earthquake and on marketing expenses as Coke integrates the bottling business. Sales volume rose 6 percent globally in the first quarter, matching the total for North America.

"Despite ongoing global geopolitical challenges, we once again delivered consistent, quality growth across all five of our geographic operating groups, with broad worldwide share gains across beverage categories,” Kent said in a statement accompanying the earnings report.

“The growing value of our brands, our consistent operating results, and our solid financial performance underscore how our system is steadily and strategically advancing its momentum around the world.”

Buffett remains a Coke bull

Buffett certainly remains excited about the company. In his most recent letter to Berkshire shareholders, he predicts Coke will double its dividend within 10 years. “By the end of that period, I wouldn’t be surprised to see our share of Coke’s annual earnings exceed 100 percent of what we paid for the investment,” Buffett writes.

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Coca-Cola (KO), the world s largest soft-drink maker, could be run by a ham sandwich, investment legend Warren Buffett has famously said. Buffett should know. The billionaire s Berkshire Hathaway (BRK.B) holding company owned $13.47 billion, or 8.7 percent, of the company s...
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Wednesday, 11 May 2011 01:24 PM
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