The Coca-Cola Company (KO - Free Coca-Cola Stock Report) continued to confront a challenging operating environment in the December quarter. Revenues at the beverage giant fell 4% from the prior-year period, with currency headwinds and structural changes at the bottling operations weighing down the top line. Earnings did climb 12%, to $0.46 a share, but fell $0.02 below our estimate. Moreover, adjusted operating income declined 4%, as the aforementioned currency headwinds overseas and weakness in the North American market took a bite out of profits.

Coke, like its rival Pepsi Co. (PEP), is struggling with lackluster demand for its products. In the fourth quarter, the company managed to once again increase its global value share of the nonalcoholic ready-to-drink market, but this translated into just a 1% increase in unit case volumes over the prior-year period. (Volumes were up 2% for the full year.) Still beverage volumes rose a respectable 6%, but carbonated items showed no improvement year over year. From a geographic perspective, the North American business remains especially challenging (overall volumes down 1%), while growth in key emerging markets has also showed signs of slowing down.

Meanwhile, the company is taking action to operate more effectively in the current challenging environment. Management has announced plans to expand its productivity and reinvestment program with the aim of generating an incremental $1 billion in productivity by 2016. The savings will support increased media spending behind Coke's brands.

Looking at 2014, we expect the company will continue to make just modest progress on the bottom line. As such, we are trimming a nickel from our full-year estimate. Our new call of $2.20 would represent a 6% increase over the company's final 2013 tally of $2.08.

Coke's recent results weren't the tonic to help the stock regain the favor of investors. KO shares underperformed during last year's bull market and support has weakened further so far in 2014, including a modest selloff in the wake of the latest earnings release. In the near term, we don't foresee a catalyst to rally the market behind this stock, though, patient investors may still want to take a closer look. At current levels, these high quality shares (Safety: 1, Highest) appear to offer worthwhile, but well-defined risk-adjusted total returns to 2017-2019.

About the Company:  The Coca-Cola Company is the world's leading marketer of ready-to-serve, nonalcoholic beverages. On any given day, 1.7 billion individual servings of the company's brands are consumed by people around the globe. The Atlanta-based company currently has more than 500 wholly owned and licensed brands, including 15 that generate $1 billion or more in annual sales.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.