The Coca-Cola Company KO has reported fourth-quarter 2024 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. The company’s revenues and earnings per share (EPS) also improved year over year. The results have benefited from continued business momentum, aided by improved pricing across markets.
Coca-Cola reported a comparable EPS of 55 cents in the fourth quarter, up 12% from the year-ago period. Comparable EPS also beat the Zacks Consensus Estimate of 51 cents. Unfavorable currency translations hurt the comparable EPS by 11 percentage points. Comparable currency-neutral earnings per share rose 23% year over year.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Revenues of $11.5 billion improved 6% year over year and surpassed the Zacks Consensus Estimate of $10.69 billion. Organic revenues rose 14% from the prior-year quarter. Coca-Cola’s top line gained from revenue growth across all operating segments, except for Bottling Investments. Results have also been aided by an improved price/mix and a rise in concentrate sales, offset by adverse currency rates.
For the fourth quarter and 2024, Coca-Cola gained a global value share in the total non-alcoholic ready-to-drink beverages category.
Shares of Coca-Cola increased 3.1% in the pre-market trading session following the better-than-expected fourth-quarter results. The Zacks Rank #3 (Hold) stock has risen 2.2% in the past three months against the industry’s decline of 4.8%.
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Detailed Picture of KO’s Q4 Volume & Pricing
In the reported quarter, concentrate sales moved up 5% year over year, and the price/mix improved 9%. The price/mix benefited from higher pricing in the markets facing intense inflation, which contributed 4 points to the improvement. Also, pricing actions across the marketplace and a favorable mix contributed to the rest of the increase. In the quarter, concentrate sales were 3 points ahead of the unit case volume, mainly driven by two additional days and the timing of concentrate shipments.
Coca-Cola’s total unit case volume rose 2% year over year in the fourth quarter, driven by growth in China, Brazil and the United States.
Our model predicted year-over-year organic revenue growth of 5.9% for the fourth quarter, with a 6.8% gain from the price/mix, offset by a 1% decline in the concentrate sales volume.
Coming to the cluster-category performance, the unit case volume improved 2% year over year for sparkling soft drinks and the trademark Coca-Cola categories. The sparkling category benefited from growth across all operating segments, while growth in trademark Coca-Cola reflected gains in Latin America, North America and the Asia Pacific. Coca-Cola Zero Sugar advanced 13%, aided by growth in all geographic operating segments. Also, the sparkling flavors category gained 2% year over year, owing to growth in the Asia Pacific and North America.
Volumes for juice, value-added dairy and plant-based beverages dipped 1% in the fourth quarter, led by a decline in Europe, the Middle East and Africa (EMEA), offset by growth in North America.
Unit volumes for the water, sports, coffee and tea category improved 2% year over year in the fourth quarter. Coca-Cola witnessed 2% volume growth in the water category, led by improvement in EMEA, Latin America and the Asia Pacific. Sports drinks fell 2%, as gains in EMEA were more than offset by declines across North America and the Asia Pacific. The coffee business dipped 1% due to a soft Costa coffee performance in the U.K. The tea volume rose 5%, backed by growth in all operating segments.
CocaCola Company (The) Price, Consensus and EPS Surprise
CocaCola Company (The) price-consensus-eps-surprise-chart | CocaCola Company (The) Quote
Peak Into KO’s Segmental Details
Reported revenues rose 10% year over year for Latin America, 16% for North America, 6% for EMEA, 9% for the Asia Pacific and 5% for Global Ventures. However, revenues declined 23% for Bottling Investments.
Organic revenues improved 25% year over year in Latin America, 15% in North America, 17% in EMEA, 1% in the Asia Pacific, 3% in Global Ventures and 7% in Bottling Investments.
Analyzing Coca-Cola’s Q4 Margins
In dollar terms, the operating income advanced 19% year over year to $2.71 billion, including a 14-point impact of currency headwinds. Comparable operating income rose 8% year over year to $2.73 billion. Comparable currency-neutral operating income advanced 22% on strong organic revenue growth across most segments, offset by a decline in Bottling Investments and currency headwinds.
The operating margin of 23.5% in the fourth quarter expanded 252 basis points (bps) from 21% in the prior-year quarter. The comparable operating margin expanded 84 bps to 24%. The comparable currency-neutral operating margin expanded 266 bps to 25.8%.
Our model predicted the fourth-quarter adjusted operating margin to expand 50 bps year over year to 23.6%, driven by 180-bps growth in the gross margin, offset by a 120-bps increase in the SG&A expense rate.
KO’s Guidance for 2025
Management has outlined its guidance for 2025. It anticipates organic revenue growth of 5-6% for 2025. Comparable net revenues are expected to include a 3-4% currency headwind based on current rates and hedge positions. The guidance also includes a slight negative impact of acquisitions, divestitures and structural changes. The company anticipates an underlying effective tax rate of 20.8% for 2025.
Comparable currency-neutral EPS for 2025 is expected to increase 8-10% year over year. The company anticipates comparable EPS growth of 2-3% for 2025 from the $2.88 reported in 2024.
Comparable EPS growth is expected to include currency headwinds of 6-7%, and a marginal impact of acquisitions, divestitures and structural changes.
Management envisions an adjusted free cash flow of $9.5 billion for 2025, including $11.7 billion in cash flow from operations. Capital expenditure is likely to be $2.2 billion.
For first-quarter 2025, comparable revenues are expected to include a 3-4% currency headwind, and a 2-3% negative impact of acquisitions, divestitures and structural changes. Comparable EPS is estimated to include a 5-6% currency headwind, and 2-3% negative impacts of acquisitions, divestitures and structural changes.
Additionally, the company has provided its initial view for 2025. It expects comparable net revenues to include a low-single-digit currency headwind based on the current rates and hedged positions. Meanwhile, comparable EPS is anticipated to include a mid-single-digit currency headwind for 2025. The company also noted that the first quarter of 2025 has two fewer days than first-quarter 2024.
Stocks to Consider
We have highlighted three better-ranked stocks from the Consumer Staple sector, namely United Natural Foods UNFI, Vita Coco Company COCO and US Foods USFD.
United Natural currently sports a Zacks Rank #1 (Strong Buy). UNFI shares have rallied 44.4% in the past three months. The company has a trailing four-quarter earnings surprise of 553.1%, on average. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for United Natural’s current financial-year sales and earnings implies growth of 0.3% and 442.9%, respectively, from the year-ago period’s reported figures.
Vita Coco currently has a Zacks Rank #2 (Buy). COCO shares have risen 12% in the past three months. The company has a trailing four-quarter earnings surprise of 17.6%, on average.
The Zacks Consensus Estimate for Vita Coco’s current financial-year sales and EPS implies growth of 3.7% and 29.7%, respectively, from the year-ago period’s actuals.
US Foods currently carries a Zacks Rank of 2. USFD shares have risen 4.9% in the past three months. USFD has a trailing four-quarter negative earnings surprise of 0.4%, on average.
The Zacks Consensus Estimate US Foods’ current financial-year sales and earnings suggest growth of 6.4% and 18.6%, respectively, from the year-ago period's reported figures.
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CocaCola Company (The) (KO) : Free Stock Analysis Report
Vita Coco Company, Inc. (COCO) : Free Stock Analysis Report
United Natural Foods, Inc. (UNFI) : Free Stock Analysis Report
US Foods Holding Corp. (USFD) : Free Stock Analysis Report
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