The Coca-Cola Company (NYSE: KO) has announced its fourth-quarter 2024 results, which easily exceeded the expectations of analysts on Wall Street. Sales reached $11.5 billion, significantly higher than the projected $10.67 billion. Adjusted earnings per share (EPS) was $0.55, while expectations were at $0.52. The company recorded a strong 9% growth in the price mix, while sales volume increased by 2%, reversing previous pessimistic forecasts. In addition, the company's current shares are trading in a correction, which, combined with strong fundamental parameters, is a potential opportunity to include Coca-Cola in the investment portfolio.
Performance by region
The company posted positive results across all major markets, with Latin America seeing the largest increase in the price mix, namely by 23%, which in turn led to a 2% increase in sales volume. Such a fundamental increase in prices was primarily due to inflationary pressures in Argentina.
In North America, Coca-Cola also posted a 1% increase in sales volume, with the categories of fizzy drinks, juices, dairy and plant-based products growing significantly. Growth in the price mix reached 12%, signaling the company's strong ability to maintain its pricing strategy even in a challenging environment.
Full-year performance 2024
For the full year 2024, Coca-Cola reported 12% organic sales growth, beating analysts' expectations of 10%. The largest growth was recorded in the segments of Coca-Cola beverages and the aforementioned juices, dairy and plant products. This performance confirms the company's strong position in the non-alcoholic beverage segment, with Coca-Cola continuing to expand its portfolio as well as maintain its dominant market position.
Outlook for 2025
The company expects organic revenue growth to reach 5% to 6% in 2025, indicating a more moderate growth rate compared to 2024, but the company also expects adjusted earnings per share (EPS) to grow in the range of 2% to 3%. [1]
According to Chief Financial Officer John Murphy, a normalized pricing environment is expected, which means that the room for price increases will be more limited in the coming year. The company will thus focus primarily on maintaining sales volume and optimizing costs.
Comparison with competitors
Coca-Cola (KO) shares have risen 7%1 over the past year, better than its main competitor PepsiCo (PEP), which has fallen 16%2, but Coca-Cola has outperformed the S&P 500, which has risen 20% over the past year.3*
This difference suggests that investors currently have a greater preference for growth technology companies, with the beverage sector in a phase of steady but more moderate growth. Nevertheless, Coca-Cola has shown resilience to macroeconomic challenges and continues to manage to generate profits.
Risk factors
While Coca-Cola's results have been strong, the company faces several potential risks. One of them is possible tariffs and rising costs in agriculture, which could affect the price of orange juice and other similar products. In addition, adverse conditions in international markets may affect demand in some regions.
Coca-Cola will need to efficiently manage its supply chains and optimize costs to maintain profitability in the event of such adverse economic developments.
Strategic partnerships
Coca-Cola continues to strengthen its partnerships with major restaurant chains, which helps it maintain a strong market share. Some of the most notable partners include McDonald's, Burger King and Taco Bell, with the company reportedly playing a role in the launch of McDonald's $5 package menu, which may increase Coca-Cola's beverage consumption within the fast-food segment.
An interesting step is also the return of the Coca-Cola brand to the food courts of the Costco chain, which previously cooperated with Pepsi. This move may also bring additional sales growth to Coca-Cola.
Why Coca-Cola?
Coca-Cola exceeded expectations in all major indicators in the 4th quarter of 2024, with growth in the price mix contributing to the strong quarter, but also growth in sales volume. The company continues to strengthen its position in the non-alcoholic beverage segment and expands cooperation with large restaurant partners.
While more moderate growth is expected in 2025 and there are risks associated with agricultural inflation and potential tariffs, Coca-Cola has a well-diversified portfolio and a strong market position, allowing it to maintain steady growth while generating shareholder value.
For investors looking for a stable dividend stock with consistent growth, Coca-Cola remains an attractive choice, especially when compared to the weaker performance of its competitors. While the company's stock is not experiencing the surge of technology stocks, its stability and strong financial results make Coca-Cola a reliable long-term investment.
* Past performance is not a guarantee of future results.
[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which is subject to change. Such statements are not a guarantee of future performance. They involve risks and other uncertainties that are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.
1Coca-Cola stock price performance over the past five years: https://tradingeconomics.com/ko:us
2PepsiCo share price performance over the past five years: https://tradingeconomics.com/pep:us
3S &P 500 price performance over the past five years: https://tradingeconomics.com/spx:ind
Resources:
https://investors.coca-colacompany.com/financial-information/financial-results
