Coca-Cola Earnings: Solid Volume on Innovation and Digital Engagement; Currency Headwinds Persist

We plan to maintain our $60 fair value estimate for wide-moat Coca-Cola after digesting the company's first-quarter results. Sales were up 3%, led by innovation across the soda and nonsparkling portfolio and by deft in-market execution. Adjusted earnings per share rose 7% on refranchising benefits and operational efficiency gains. Despite a softer consumer backdrop in the lower-income cohort in the US and continued instability and macro challenges across Europe, Latin America, and Asia, we think Coke’s total beverage portfolio approach, in addition to product innovations and brand investments, should continue to fuel volume and pricing growth. We plan to maintain our 2024 forecasts for growth of 1% in sales and 5% in adjusted EPS, incorporating mid-single-digit currency headwinds and the impact of refranchising. Our 10-year projections for mid-single-digit sales growth and low 30s average operating margins also remain in place. The shares look fairly valued.