Coca-Cola Earnings: Innovation and Brand Investment Buoyed Sales Expansion; Shares Undervalued

We plan to maintain our $60 fair value estimate for wide-moat Coca Cola after digesting slightly-better-than expected third-quarter results, driven by beverage innovations, brand investments and deft in-market execution. Organic revenue grew 11%, edging our 10% estimate while adjusted EPS growth of 7% matched our expectation. Coke nudged up 2023 organic revenue and adjusted EPS growth guidance ranges to 10%-11% (from 9%-10%) and 7%-8% (from 5%-6%), which we view as achievable, and we are tweaking our own 2023 estimates to align with the improved outlook. Our 10-year projections for mid-single-digit sales growth and low 30s average operating margins remain in place. After a 3% intra-day price pop, shares still trade at a 10% discount to our intrinsic valuation and we suggest long-term investors to consider buying this name.