Coca-Cola Earnings: Focus on Volume Expansion Good for Long-Term Sales and Profit Growth

Despite intense competition, we think the firm remains well-positioned to capture growth in the coming years.

Dan Su, CFA 14 February, 2024 | 7:53AM
Facebook Twitter LinkedIn

Coca-Cola bottles are seen in this photo.

Key Morningstar Metrics for Coca-Cola

What We Thought of Coca-Cola’s Earnings

We don’t plan any material changes to our US$60 fair value estimate for Coca-Cola KO after digesting its 2023 results, as its sales growth of 6% and adjusted earnings of $2.69 per share matched our estimates. Despite a softening consumer backdrop and intense competition in the beverage aisle, we think the firm remains well-positioned to capture growth in the coming years, thanks to heavy investments in innovations and brands, as well as deft in-market executions that assert its competitive standing globally.

For 2024, we view management’s outlook for mid-single-digit sales growth as reasonable after adjusting for the impact of refranchising, but we plan to trim our adjusted EPS estimate by a low-single-digit percentage due to worse-than-expected near-term currency headwinds. Our 10-year projections for mid-single-digit sales growth and low-30s average operating margins remain in place.

Impressively, Coke delivered organic revenue growth of 12% in 2023 based on a broad-based, 2% beverage volume expansion, better than the 1% contraction at PepsiCo PEP. We attribute the volume resilience to the firm’s consumer-valued innovations in ingredients, formulas, and packaging, as well as smart digital marketing that resonates with consumers globally.

Get the Latest Stock Insights in Your Inbox

Subscribe Here

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Coca-Cola Co62.53 USD-0.62Rating
PepsiCo Inc157.79 USD-1.68Rating

About Author

Dan Su, CFA

Dan Su, CFA  Dan Su, CFA, is a senior stock analyst with Morningstar.

© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy       Disclosures        Accessibility