Shares of Australia's Coca-Cola and Beam-branded beverage bottler and distributor, Coca-Cola Amatil Ltd (ASX: CCL), soared as much as 3.9% higher today on the back of its AGM presentation this morning.
Coca-Cola Amatil, or CCA, reaffirmed recent guidance for no further decline in earnings per share (EPS) after 2014 and said it is "targeting to return to mid-single digit EPS growth levels."
In recent times investors have grown concerned about the possible implications CCA's fierce rivalry with PepsiCo would have on profit margins. A price war between Australia's supermarket giants, Woolworths Limited (ASX: WOW) and Coles – owned by Wesfarmers Ltd (ASX: WES), as well as a tough Indonesian marketplace where CCA distributes Coca-Cola products.
Pleasingly, however, the company today said it is well placed to target a dividend payout ratio over 80%. It also forecast capital expenditures to average $330 million per annum over the next three years.
"I believe we have made concrete progress in implementing strategies to strengthen the market leadership position of the Company which we believe will enable us to return to growth and generate attractive and sustainable returns for our shareholders over the next few years," CCA Managing Director Alison Watkins said. "While we are pleased with the progress we have made to date, we cannot however become complacent"
Should you buy Coca-Cola Amatil shares?
Despite jumping 3.9% higher today, CCA shares could present as a sound investment over the next three to five years if it can achieve mid-single-digit earnings per share growth and maintain an 80% payout ratio, as is being targeted.
