To The Moon

$Coca-Cola(KO)$ is scheduled to release its first-quarter financial results tomorrow, 29 April 2025, before the US market opens.

Revenue: Analysts are generally expecting revenue around $11.17 billion to $11.21 billion. This represents a slight decrease compared to the $11.23 billion reported in the same quarter last year.

Organic Revenue Growth: Despite the flat-to-slightly-down reported revenue forecast (which is impacted by currency and divestitures), analysts anticipate positive organic revenue growth (which excludes these factors and reflects underlying performance). Expectations are generally in the range of 5-6% year-over-year, driven primarily by pricing and product mix.

Earnings Per Share (EPS): The consensus estimate is hovering around $0.71 to $0.72 per share. This is essentially flat compared to the $0.72 reported in Q1 of last year.

Coca-Cola (KO) Last Neutral Earnings Call Saw Share Price Gain Significant 12.22%

Coca-Cola had a neutral earnings call on 11 Feb 2025 which saw its share price gained 12.22% since.

The earnings call highlighted strong financial performance with EPS and revenue growth, driven by innovation and digital expansion. However, challenges remain in certain regions with volume declines and macroeconomic pressures. Currency headwinds and inflationary pressures are ongoing concerns.

Coca-Cola (KO) Guidance

In the Coca-Cola Company's Fourth Quarter and Full Year 2024 Earnings Results Conference Call, the company reported a 7% growth in comparable earnings per share, despite facing nearly double-digit currency headwinds and bottler refranchising impacts. The call highlighted a robust 14% organic revenue growth in the fourth quarter, with unit case growth at 2% and concentrate sales up by 3 points. Price/mix growth was 9%, driven by normal pricing actions and inflationary pricing. The company achieved a comparable gross margin increase of approximately 160 basis points and a comparable operating margin increase of 80 basis points. Looking forward, Coca-Cola expects to maintain its momentum, targeting a 5-6% organic revenue growth in 2025 while navigating a dynamic external environment.

Coca-Cola anticipates currency headwinds of 3-4 points for comparable net revenues and 6-7 points for comparable earnings per share in 2025, with a projected underlying effective tax rate of 20.8%.

Key Areas to Watch For Coca-Cola (KO)

Pricing vs. Volume: A major focus will be the balance Coca-Cola achieved between raising prices (price/mix) and maintaining sales volume (unit cases). While price increases have boosted revenue recently, investors will watch closely for any signs that higher prices are significantly impacting consumer demand or causing shifts to cheaper alternatives, especially given global inflationary pressures.

Fourth quarter organic revenue grew 14%, with unit case growth at 2% and price/mix growth at 9%.

Geographic Performance: Performance across different regions will be key. While North America has shown strength, analysts will look for updates on demand trends in Europe and emerging markets, noting potential headwinds in areas like China or regions facing specific economic or geopolitical instability.

Significant growth in North America with robust top line and profit growth, driven by Trademark Coca-Cola and fairlife.

Volume declined in Europe and Africa during the quarter, with pressure in North Africa and Nigeria.

Continued macro headwinds in China and the Middle East, with mixed performance in Western and Eastern European markets.

Category Performance: Beyond traditional sparkling beverages, the performance of categories like hydration (Dasani, smartwater), sports drinks (Powerade, BODYARMOR), coffee (Costa), tea (Gold Peak, Fuze Tea), and juices (Minute Maid, Simply) will be important, as will the contribution from recent innovations.

Fuze Tea grew retail value 3x faster than the category, Topo Chico continued its momentum, and Minute Maid Zero Sugar realized strong growth.

Added approximately 440,000 outlets to digital customer platforms in India, enhancing tailored offerings.

Margin Resilience: Analysts expect gross margins to remain relatively stable. However, operating margins will be watched to see how effectively the company managed input cost inflation, operating expenses, and marketing investments.

Achieved a 7% comparable earnings per share growth in 2024 despite nearly double-digit currency headwinds.

Currency Headwinds & Divestitures: Coca-Cola operates globally, making it sensitive to foreign exchange fluctuations. The company previously indicated it expects significant currency headwinds (potentially 3-4% negative impact on Q1 revenue, 5-6% on EPS) and impacts from divestitures (potentially 2-3% negative impact on revenue and EPS). Confirmation of these impacts will be important.

Significant 11% currency headwinds impacted EPS growth and are expected to continue into 2025. Intense inflationary pricing in certain markets, expected to moderate but still a concern moving into 2025.

Full-Year Outlook: Any confirmation or adjustment to Coca-Cola's previously stated guidance for the full fiscal year 2025 (which included targets like 5-6% organic revenue growth) will be critical for the stock's reaction.

Coca-Cola (KO) Price Target

Based on 25 analysts from Tiger Brokers app offering 12 month price targets for Coca-Cola in the last 3 months. The average price target is $71.91 with a high forecast of $85.00 and a low forecast of $59.60 The average price target represents a 5.35% change from the last price of $71.91.

Technical Analysis - Exponential Moving Average (EMA)

Coca-Cola's stock has shown resilience recently, outperforming the broader consumer staples sector over the past year.

As a "Dividend King" with a long history of dividend increases, it's often seen as a relatively safe defensive stock, which may have attracted investors amid recent market volatility.

Valuation is considered somewhat elevated compared to historical averages, reflecting its perceived stability and brand strength.

But recent weeks of downside movement and RSI is showing signs of dwindling momentum, this could be due to the impact of tariffs for Coca-Cola as it sells to many parts of the world, but can we still take Coca-Cola as a safe defensive stocks.

I would think for the long run, Coca-Cola current price looks attractive to go for dividend play and place it under defensive strategy as we are not sure if we would go back to inflation triggered pricing again.

Summary

Coca-cola tomorrow's report is expected to show continued underlying organic growth driven by pricing, but potentially flat-to-slightly-down reported results due to currency and divestitures.

The key will be the sustainability of pricing power without sacrificing too much volume, performance in international markets, and the company's confidence in its full-year outlook.

I think it might be good to follow the guidance for 2025 and see how Coca-Cola is looking to make the price strategy in response to ongoing tariffs on U.S. goods and services.

Appreciate if you could share your thoughts in the comment section whether you think Coca-Cola would come up with a favourable pricing strategy to navigate through the uncertainity posed by the tariffs.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.