Coca-Cola (NYSE: KO) is a global beverage company known for its soft drinks, bottled water, coffee, and tea. Following the earnings and revenue beat in the fourth quarter of fiscal 2024, the stock rose significantly in premarket trading.
Coca-Cola Q4 Earnings Results
In the fourth quarter results, Coca-Cola reported revenue of $11.5 billion, a 6% YoY increase, and above estimates of $10.67 billion. Its earnings per share came in at $0.55, a 12% YoY increase, and above estimates of $0.52.
Revenue growth was driven by a 9% increase in price/mix and a 5% growth in concentrate sales. The concentrate sales were 3 points higher than unit case volume, driven by the time of shipments, and an additional two days for the quarter.
Other Q4 Highlights
The company reported a non-GAAP operating margin of 24% compared to 23.1% the previous year. As of the end of fiscal 2024, it had non-GAAP free cash flow and cash flow from operations of $4.7 billion and $6.8 billion, respectively. Both figures declined, driven by a $6 billion deposit to the IRS in relation to ongoing tax litigation.
For both the fourth quarter and full year, Coca-Cola reported a rise in market share, gaining ground on rival PepsiCo (PEP).
Full Year Highlights
Full-year revenue increased 3% YoY to 47.06 billion, while non-GAAP EPS grew 7% to $2.88. Meanwhile, non-GAAP operating income increased 16% for the full year.
Capital Allocation
The company reported that it reinvested $2.1 billion in CapEx in fiscal 2024, an 11% increase YoY. For the whole of 2024, it paid out $8.4 billion in dividends, marking 62 years of consecutive dividend increases.
It also issued $0.7 billion worth of shares related to employees’ exercise of stock options. Additionally, it bought back $1.8 billion worth of shares for a net share repurchase of $1.1 billion. It has around $4.9 billion in share repurchase authorization.
Coca-Cola Issues Guidance
For fiscal 2025, the company expects organic non-GAAP revenue growth of 5% to 6%. It expects to deliver comparable non-GAAP EPS growth of 2% to 3% compared to the $2.88 reported in fiscal 2024.
Coca-Cola forecasts that the non-GAAP free cash flow will be $9.5 billion in fiscal 2025. Additionally, it expects non-GAAP free cash flow of around $11.7 billion and capital expenditure of $2.2 billion.
Coca-Cola (KO) Stock Performance
Following the earnings and revenue beat in the fourth quarter, KO shares soared 3.5% in premarket trading to $66.81 as of 8:14 AM EST.
Looking at the forward P/E of KO, it is 21.23, while that of PEP is 17.21, making it a cheaper option. However, KO stock has performed better than PEP, with KO declining 6.01% in the past 6 months while rising 8.38% in the past year. Meanwhile, PEP has been down 16.27% in the past 6 months and 13.91% in the past year.
KO stock has underperformed the market, with the S&P 500 rising 13.5% in the past six months and 20.69% in the past year. Analysts remain optimistic about its future, giving KO a strong buy rating. They forecast an average price of $71.46, a 10.70% upside. The highest forecast for the stock is $76, while the lowest is $66.
Should You Add Coca-Cola (KO) To Your Portfolio In 2025?
Coca-Cola (KO) is a great stock for income-oriented investors. It has increased dividends for the past 62 years, placing it amongst the ranks of dividend aristocrats. Stock is a great option for long-term wealth building, and it has also been a great source of portfolio growth in the past decades. Consequently, adding KO to your portfolio as a long-term investment could potentially benefit your portfolio.
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