Coca-Cola (NYSE:KO) Exceeds Q4 Expectations
Stock Story
Published Feb 13, 2024 07:57AM ET
Updated Feb 13, 2024 08:31AM ET
Coca-Cola (NYSE:KO) Exceeds Q4 Expectations
Beverage company Coca-Cola (NYSE:KO) reported Q4 FY2023 results topping analysts' expectations, with revenue up 6.4% year on year to $10.85 billion. It made a non-GAAP profit of $0.49 per share, improving from its profit of $0.45 per share in the same quarter last year.
Is now the time to buy Coca-Cola? Find out by reading the original article on StockStory.
Coca-Cola (KO) Q4 FY2023 Highlights:
- Revenue: $10.85 billion vs analyst estimates of $10.65 billion (1.9% beat)
- EPS (non-GAAP): $0.49 vs analyst estimates of $0.49 (small beat)
- Guidance for 2024 EPS (non-GAAP): 4-5% year on year growth from 2023 (in line with expectations)
- Free Cash Flow of $1.82 billion, down 53.5% from the previous quarter
- Gross Margin (GAAP): 57.3%, up from 55.7% in the same quarter last year
- Organic Revenue was up 12% year on year
- Sales Volumes were up 2% year on year
- Market Capitalization: $258.1 billion
Beverages and AlcoholThe beverages and alcohol category encompasses companies engaged in the production, distribution, and sale of refreshments like beer, wine, and spirits, along with soft drinks, juices, and bottled water. These companies' performance is influenced by brand strength, marketing strategies, and shifts in consumer preferences. Changing consumption patterns are particularly relevant and can be seen in the explosion of alcoholic craft beer drinks or the steady decline of non-alcoholic sugary sodas.
The industry is highly competitive, with a diverse range of products from large multinational corporations, niche brands, and startups vying for market share. It's also subject to varying degrees of government regulation and taxation, especially for alcoholic beverages.
Sales GrowthCoca-Cola is one of the most widely recognized consumer staples companies in the world. Its influence over consumers gives it extremely high negotiating leverage with distributors, enabling it to pick and choose where it sells its products (a luxury many don't have).
As you can see below, the company's annualized revenue growth rate of 11.5% over the last three years was decent as consumers bought more of its products.
This quarter, Coca-Cola reported solid year-on-year revenue growth of 6.4%, and its $10.85 billion in revenue outperformed Wall Street's estimates by 1.9%. Looking ahead, Wall Street expects sales to grow 2.8% over the next 12 months, a deceleration from this quarter.
Get The News You Want
Volume GrowthRevenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
To analyze whether Coca-Cola generated its growth from changes in price or volume, we can compare its volume growth to its organic revenue growth, which excludes non-fundamental impacts on company financials like mergers and currency fluctuations.
Over the last two years, Coca-Cola's average quarterly volume growth was a healthy 3.5%. Even with this good performance, we can see that most of the company's gains have come from price increases by looking at its 13.9% average organic revenue growth. The ability to sell more products while raising prices indicates that Coca-Cola enjoys some degree of inelastic demand.
In Coca-Cola's Q4 2023, sales volumes jumped 2% year on year. This result was an acceleration from the 1% year-on-year increase it posted 12 months ago, certainly a positive signal.
Key Takeaways from Coca-Cola's Q4 Results We were impressed with the magnitude of organic revenue growth this quarter, which also exceeded analysts' estimates. This led to a revenue beat, and while operating margin missed, EPS was in line with analysts' expectations. Looking ahead, guidance for 2024 EPS is also in line with expectations, showing that the company is staying on track. Overall, this quarter's results seemed fairly positive and shareholders should feel optimistic. The stock is flat after reporting and currently trades at $60.15 per share.
Written By: Stock Story
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.