Coca-Cola Stock Surges on Strong Fourth Quarter Results

Coca-Cola (KO 4.72%) saw a significant increase in its stock price during Tuesday's trading session, closing up 4.7%. This occurred on a day when the S&P 500's (^GSPC 0.03%) performance was largely stable, finishing approximately where it ended the previous day.

The rise in Coca-Cola's stock follows the company's announcement of its fourth quarter results, which exceeded market expectations. The beverage giant reported an adjusted earnings per share (EPS) of $0.55 and sales of about $11.5 billion for the quarter, surpassing analysts' average estimates of $0.52 EPS and $11.42 billion in revenue.

Coca-Cola Delivers Strong Overall Performance

Coca-Cola experienced a 6.5% year-over-year increase in revenue for the fourth quarter, with adjusted EPS rising 12% compared to the same period last year. Additionally, the company reported a 22% increase in currency-adjusted operating income relative to the previous year’s fourth quarter.

The strong performance was attributed to effective pricing strategies and solid results in key geographic areas. Although total case volume only grew by 2% year over year, organic revenue surged by 14%, significantly outperforming the average Wall Street growth estimate of around 7%.

The company also indicated that it gained market share across various product categories, continuing to improve its profit margins. This quarter marked a successful period for Coca-Cola, and management provided an optimistic outlook for 2025.

Future Outlook for Coca-Cola

Looking ahead, Coca-Cola anticipates an increase of 5% to 6% in adjusted organic revenue for the current year. While this target range is lower than the impressive growth seen in the fourth quarter, it reflects expectations for moderated inflation and still represents reliable growth.

Management projected an 8% to 10% growth in adjusted EPS, which adds to the positive profit outlook. Additionally, adjusted free cash flow (FCF) is estimated to reach around $9.5 billion, showing a substantial improvement from last year's $4.7 billion in FCF.

Upon today's gain, Coca-Cola stock is trading at roughly 23 times this year's projected earnings. Though this valuation may not appear particularly cheap when considering the expected growth rate, investors are purchasing stock in a leading company known for its dependable dividend.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Coca-Cola, Stocks, Earnings