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Coca-Cola (NYSE: KO) stock was down about 2% Wednesday after the beverage maker released solid Q3 earnings that topped estimates.

The company saw revenue decline 1% year over year to $11.85 billion, which is better than the $11.61 billion that analysts targeted. But organic revenue jumped an impressive 9%.

Net income fell 8% to $2.8 billion, or 66 cents per share. Adjusted earnings were 77 cents per share, which also topped earnings.

The numbers were not spectacular, but the stock was heading 2% lower. A negative catalyst may have been news of an e-coli outbreak in 10 states tied to McDonald’s (NYSE: MCD) and its Quarter Pounder burgers.

Coca-Cola CEO addresses e-coli outbreak

The Q3 revenue numbers were hurt most by a 2% drop in concentrate sales, which is basically the syrup it sells to bottlers for its carbonated beverages. However, it saw a 9% year-over-year sales increase in what it calls price and mix, which is basically the price per unit sold.

Also, Coca-Cola saw 9% organic revenue growth in the quarter, which is Coca-Cola’s preferred measure, as it excludes the impact of foreign exchange.

However, the operating margin fell to 21.2%, from 27.4% in the same quarter a year ago. The drop was partially due to a charge of $919 million related to remeasurement of the liability related to the acquisition of Fairlife in 2020, as well as currency headwinds. A 13-point currency headwind, due to foreign currency fluctuations, also impacted earnings.

“Our business continues to demonstrate resilience in the face of a dynamic external environment,” James Quincey, chairman and CEO of Coca-Cola, said. “We are encouraged by our year-to-date performance and our system’s ability to manage near-term challenges while also remaining focused on long-term growth opportunities.”

Quincey also addressed the impact, if any, of the McDonald’s e-coli situation, in response to an analyst’s question on the Q3 call. McDonald’s is one of Coca-Cola’s largest customers.

“Obviously, hearts go out to the people who have been affected by the contamination,” said Quincey. “Certainly, we’re a big partner of McDonald’s. They’re a big partner of ours. We’ll be helping them in any way we can as they work through whatever is happening. Clearly, the information is very thin on the ground as it relates to those of us further away from the situation. Certainly, when one looks at what’s in the media so far in terms of the states that have been affected, I would say, at this stage, it’s not going to be a large, significant impact to the business.”

Is Coca-Cola stock a buy?

The selloff, if it was tied to the McDonald’s news, is likely a knee jerk reaction by investors that should not have a major impact on Coca-Cola.

Otherwise, while the quarter had middling results, the outlook is fairly decent for Coca-Cola.

For fiscal 2024, the company updated its guidance calling for 10% organic revenue growth, which is at the high end of its long-term growth model. Also, it anticipates currency neutral EPS growth of 14% to 15%. In addition, the company expects to generate free cash flow of approximately $9.2 billion for the fiscal year.

One of the best features of Coca-Cola stock over the years has been its ability to generate cash flow and increase its annual dividend. It is one of the best dividend stocks on the market, having raised it for 61 straight years.

Currently, Coca-Cola offers a 49 cents per share quarterly dividend at a robust yield of 2.79%, with a payout ratio of 67%.

Coca-Cola stock also typically does well in down markets, as a consumer staple. It has had only one negative year since 2010, and that was in 2023 when the market was flying.

It is not all that cheap right now with a P/E ratio of 28, but Coca-Cola has always been a reliable stock, good for downside protection in a portfolio, with a great dividend. It would be a buy if you are looking for a stock with those qualities.

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