Wide-Moat Coke Pours Out Impressive Q2 Results, but Shares Still Overvalued

We think Coke's stellar second-quarter results showcased the pricing power of its stout beverage portfolio. Organic revenue growth clocked in at 16% (12% from price/mix and 4% from concentrate sales), on top of whopping 37% organic revenue growth in the same period a year ago. And even as prices at the shelf have continued to climb (including roughly 8%-10% inflation rate in the U.S. and Europe, per management), demand elasticities remain resilient, further evidencing Coke’s strong brand intangible asset. From our vantage point, the extent to which Coke is prioritizing innovation at the premium and value tier (particularly as it relates to varying pack sizes) should help stymie the threat of ongoing inflationary pressures to volumes.