Coca-Cola (KO) is poised to release its fourth-quarter earnings report before the market opens on Tuesday, along with its 2025 guidance. Analysts anticipate strong results, even as the company grapples with a complex global economic environment. This report will be closely watched for insights into how Coca-Cola plans to navigate headwinds like currency fluctuations, inflationary pressures, and shifting consumer behavior.
Table Content:
Wall Street Expectations and Key Performance Indicators
Consensus estimates peg Q4 revenue at $10.67 billion and earnings per share (EPS) at $0.52. These figures, while robust, represent a slight decline compared to the same period last year. Analysts predict a 6.71% increase in price/mix, indicating the company’s continued ability to leverage pricing power. However, unit case volume growth is expected to contract by 0.21%, reflecting potential impacts of cautious consumer spending.
Illustration of Coca-Cola bottles and cans inside an Auchan supermarket in Paris, France, on January 29, 2025.
Full-year organic revenue is projected to grow by 10%, largely driven by strategic price increases. This growth underscores Coca-Cola’s resilience in the face of challenges such as rising commodity costs and fluctuating international markets. As Bank of America analyst Bryan Spillane noted, Coca-Cola stands out among consumer staple companies for its consistent delivery of growth in line with targets, striking a “decent balance between volume growth and price.”
Currency Headwinds and International Market Dynamics
UBS analyst Peter Grom highlights Coca-Cola’s ability to deliver “strong positive mid-single digit organic revenue growth” in a challenging environment where many peers are struggling. However, the strengthening US dollar poses a significant headwind. Grom emphasizes that concerns regarding the dollar’s impact on earnings have intensified in recent months.
In the previous quarter, CEO James Quincey expressed confidence in Coca-Cola’s ability to mitigate currency fluctuations, referencing the company’s historical track record of growing US dollar EPS despite similar challenges. Investors will be keen to see how the company plans to address these pressures in its 2025 guidance.
Inflation, Commodity Costs, and Pricing Strategies
Beyond currency fluctuations, Coca-Cola faces headwinds from inflation and rising agricultural commodity costs, including orange juice. These factors could impact profitability and necessitate further adjustments to pricing strategies. CFO John Murphy previously indicated an expectation for a “more normalized pricing environment” in 2025, suggesting a potential shift in the company’s approach.
Orange Juice Futures Prices (2023)
CFRA analyst Garrett Nelson, who maintains a Hold rating on Coca-Cola shares, anticipates that growth in emerging markets and newer products like Coke Energy and AHA flavored sparkling water will contribute to sales. However, he also identifies risks related to foreign currency, consumer trends, and the company’s limited product diversification compared to competitors with food and snack offerings.
Partnerships and Competitive Landscape
Coca-Cola’s strategic partnerships with fast-food chains like McDonald’s will continue to be a focus. The company’s reported involvement in McDonald’s $5 meal bundle and the recent news of Costco converting its food court fountain business back to Coca-Cola from PepsiCo underscore the importance of these relationships in driving volume. Meanwhile, PepsiCo’s performance, marked by a 16% share price decline in the past year compared to Coca-Cola’s 7% gain, highlights the contrasting fortunes of the two beverage giants. However, both companies lag behind the S&P 500’s 20% gain.
Looking Ahead
Coca-Cola’s Q4 earnings report and 2025 guidance will provide crucial insights into the company’s strategic direction and its ability to navigate a complex and dynamic global market. Investors will be particularly attentive to management’s commentary on currency headwinds, pricing strategies, and growth prospects in international markets. The company’s performance relative to its peers and its ability to deliver sustainable long-term growth will be key factors in determining its future success.
