It’s that time of the quarter: Earnings season. This is the time for companies to prove that their growth strategy is working, with the proof being in the earnings results. Coca-Cola (KO) is an example of a company that I believe is executing its growth strategy. The beverage company’s third-quarter earnings results offer proof to back up my claim. So, without further ado, please allow me to explain why I believe Coca-Cola stock is a buy.

A Nice Third Quarter

Coca-Cola’s net revenue fell by 0.8% year-over-year in the third quarter ended September 27^th. On paper, that may seem disappointing. However, the main reason Coca-Cola’s net revenue declined was because of something largely outside of its control – unfavorable foreign currency translations, which was a 5% hit to its topline. Another headwind to Coca-Cola was its refranchising of bottling operations in India, Bangladesh, and the Philippines earlier in the calendar year. This weighed on net revenue to the tune of 4% in the quarter.

Consumers were mostly undeterred by price hikes. Coupled with a more favorable product mix, this helped Coca-Cola’s topline grow by 10% in the third quarter. In addition, volumes only declined by 1% as a result of these higher prices. This allowed Coca-Cola to post a vigorous 9% organic revenue growth rate in the third quarter.

Moving to the bottom line, the company’s comparable EPS grew by 5% over the year-ago period to $0.77. Incremental share buybacks and modest improvements in the net profit margin via disciplined cost controls helped Coca-Cola put up decent comparable EPS growth during the quarter.

More Room for Growth Ahead

Coca-Cola’s third-quarter results are great and all. The focus for me, though, is what the future could look like. In the case of the consumer staple firm, its prospects aren’t shabby. In recent years, Coca-Cola’s global ready-to-drink beverage market share has remained in the high 20% range. This is in an industry that consistently puts up low to mid-single-digit annual revenue growth.

Coca-Cola also has been known for its ability to relaunch brands with improved flavors or better offerings. A recent example is the successful relaunch of Ayataka tea in Japan, as per CEO James Quincey’s remarks in last quarter’s earnings call. Aside from Coca-Cola’s internal efforts to develop products, it has also been active in the M&A space throughout its history. The company has the financial means to identify fast-growing brands and acquire them in order to strengthen market share in key beverage categories.

Looking forward, similar growth for the global beverage industry should continue as population and economic growth drive higher demand for ready-to-drink beverages in emerging markets. When combining Coca-Cola’s advantageous market position with its modest share repurchases, we can see that the company has a path to comparable EPS growth. Indeed, analysts expect that Coca-Cola will grow its comparable EPS by 6% in 2024 to $2.85 and 6.7% in 2025 to $3.04.