Coca-Cola (KO) posted another strong quarter as it gains ground on rival PepsiCo (PEP).
In its fourth quarter earnings report, which came out before market open on Tuesday, the company bested the Street's estimates across the board. Revenue came in at $11.5 billion, compared to expectation of $10.67 billion. Earnings per shares came in $0.55, compared to expectation of $0.52. That was largely drive by higher price/mix, which grew 9%, while unit case volume increased 2%.
CEO James Quincey said the company continues to "to lead through dynamic external environments" with "global scale" and "local-market expertise" that allows it to "capture the vast opportunities ahead.”
"It's only a handful of these consumer staple companies that are actually delivering the kind of growth that you would expect, or growth in line with their targets," Bank of America analyst Bryan Spillane told chof360 Finance prior to earnings. The company strikes "a decent balance between volume growth and price."
For the full year, organic revenue grew 12%, ahead of the 10% increase the company expected as higher prices have helped counter headwinds like more cautious consumers, less favorable commodity costs, and more challenging trends in international markets.
"We believe [Coca-Cola's] ability to deliver strong positive mid-single digit organic revenue growth in an environment where many global staples peers are likely to deliver positive low-single digit growth (and in some cases are struggling to hit their algorithm) continues to stand out," UBS analyst Peter Grom said in a note.
Shares of the beverage giant are up 7% in the past year, compared to a 16% drop for PepsiCo. It still trails behind the S&P 500's (^GSPC) 20% gain.
In 2025, the company expects to deliver organic revenue growth of 5% to 6%, as well as adjusted earnings growth of 2% to 3%.
Here's what Coca-Cola reported in the fourth quarter, compared to what Wall Street expected
Revenue: $11.5 billion versus $10.67 billion
Adjusted earnings per share: $0.55 versus $0.52
Price/mix growth: 9% versus 6.71%
Unit case volume growth: +2% versus -0.21%
Spillane said previously if the Latin America market ends the year "better than the last couple of quarters ... that would be a good sign for 2025."
For Q4, the region's net revenue grew 3%, while price/mix and unit case volume were up 23% and 2%, respectively, led by the growth of Coca-Cola drinks in the region.
In North America, unit case volume grew 1%, driven by "growth in sparkling flavors, juice, value-added dairy and plant-based beverages, and Trademark Coca-Cola." Price/mix for the region also grew 12%, "driven by pricing actions in the marketplace and favorable mix," the company said.
Story Continues
For the full-year, non-alcoholic ready-to-drink beverages gained value share, with gains across Coca-Cola and juice, value-added dairy and plant-based beverages.
The impact of potential tariffs and inflation on agriculture commodities, including prices of orange juice, will also be headwinds for management to address.
In the previous third quarter earnings call with investors, CFO John Murphy said he expects 2025 to be "a more normalized pricing environment."
Fast food chains like McDonald's (MCD), Burger King (QSR), and Taco Bell (YUM) have been trying to boost foot traffic with value and meal deals. Coca-Cola reportedly played a role in the $5 meal bundle at McDonald's. Costco (COST) will also be converting its food court fountain business back over to Coca-Cola, from rival PepsiCo.
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Brooke DiPalma is a senior reporter for chof360 Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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