Beverage titan The Coca-Cola Company (KOFree Coca-Cola Stock Report) delivered solid results for its September quarter. Most notably, earnings rose 16% year over year, to $0.58 a share, beating our estimate by $0.02.

As has been the case for the last several years, revenues continued to shrink, with the lingering effects from refranchising efforts across the bottling system causing the top line to decline 9%, to $8.2 billion. On an organic basis, however, revenues rose 6%, powered by 4% growth in concentrate sales and 2% gains from pricing and mix. The company attributed the strength primarily to successful innovation and revenue growth strategies in the sparkling drinks category. For instance, the Coca-Cola Zero Sugar brand generated double-digit volume growth. Meanwhile, operating profits rose at a double-digit clip, as the absence of low-margin bottling operations and ongoing productivity efforts powered a nearly 600 basis-point improvement in the operating margin.

The quarter was also marked by some notable activity on the mergers-and-acquisition front. The biggest development was the company's agreement to acquire Costa Limited, a U.K.-based operator of coffee shops and coffee-vending machines. The $5.1 billion transaction, which is likely to close in the first half of 2019, ought to be slightly accretive to earnings in the first year. More importantly, Coke expects Costa to provide it with the capabilities to become a much-bigger player in the $500 billion global hot-beverage category.

Looking ahead, the company stuck to its full-year outlook for 2018, which calls for organic revenue growth of at least for 4% and a 9% (or better) improvement in comparable currency neutral operating income. Too, earnings are still expected to climb 8% to 10%. As a result, we are making no changes to our full-year share-net estimate of $2.10 a share, which represents an increase of 10% from 2017. However, our December-quarter call has been trimmed from $0.46 to $0.44, which implies a year-over-year improvement of 13%.

Coke's third-quarter results got generally positive reviews from the market, as the stock traded modestly higher on the news. Notably, this long-time market laggard has held up nicely during the broader sell-off in U.S. equities during October. A shift in investor sentiment away from riskier assets is likely working in KO's favor. Indeed, the stock carries our Highest rank (1) for Safety and gets our top score (100) for Price Stability. Meanwhile, the shares also provide a decent measure of current income, offering a yield that is roughly 120 basis points higher than the Value Line average of 2.2%.

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.