Coca-Cola: Bottle Is Half Full

The Coca-Cola Company (KO), the world largest soft-drink maker, reported its third quarter (3Q) financial results for fiscal year 2013 (FY13) on October 16. The company’s revenues are typically the highest in the summer months – or the second and third quarters – when warm weather acts as a demand driver for soft drink sales.

Overall Results

In the latest quarter ended September 30, 2013, Coca-Cola reported an EPS of $0.54, an 8% Year-over-Year (YoY) increase from the same quarter last year. The EPS figure was in line with analysts’ estimates, signaling strong fiscal management, despite a YoY decline in overall revenues.

Total net revenues for the quarter came in at $12.03 billion, and missed analyst expectations of $12.05 billion by just 0.19%. Reported revenues declined 3% YoY, mainly due to restructuring charges in its Philippines and Brazil operations. After excluding restructuring costs, and accounting currency fluctuations, global revenues actually increased 4%.

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Coca-Cola Vs. PepsiCo: Coke’s Got More Fizz

When considering dividend stocks, investors seek fundamentally strong companies that pay out stable and incremental dividends without cutting corners in times of crisis. The sustainability of dividend payments is measured usually by comparing a few important metrics between different companies.

Coca-Cola (KO) and PepsiCo (PEP), the two largest global beverage companies, have traditionally been considered strong dividend stocks. Both companies are included in the S&P Dividend Aristocrats List, and their stock prices are resilient enough to hold up during a financial downturn.

Even though the two are quite closely matched in terms of dividend yields, debt ratios, and revenue growth, we will be digging deeper to find out which of the two companies is in a better position to pay dividends on a sustained basis.

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