Coca-Cola's Growth Continues Ahead of Q4 Earnings: Time to Invest?

Core Viewpoint - The Coca-Cola Company is expected to report year-over-year bottom-line growth for the fourth quarter of 2024, with earnings anticipated at 51 cents per share, reflecting a 4.1% increase from the previous year [1][2]. Financial Performance Expectations - The Zacks Consensus Estimate for fourth-quarter revenues is $10.7 billion, indicating a 1.5% decline from the year-ago quarter [2]. - Coca-Cola has shown a positive earnings surprise trend, with an average surprise of 3.9% over the trailing four quarters and a 4.1% surprise in the last reported quarter [3]. - The company has a Zacks Rank of 3 and an Earnings ESP of +0.35%, suggesting a favorable outlook for earnings [4]. Business Trends and Growth Drivers - Coca-Cola's growth is supported by a robust brand portfolio, investments, and revenue growth across its segments, driven by improved pricing/mix and volume increases [5]. - The company expects a 10% organic revenue growth for 2024, up from the previous guidance of 9-10% [7]. - Comparable currency-neutral EPS is projected to increase by 14-15%, with comparable EPS likely growing 5-6% year-over-year for 2024 [8]. Market Dynamics and Challenges - The fourth quarter is expected to reflect gains from innovations and increased digital investments, with e-commerce growth rates doubling in many countries [9]. - Despite favorable price/mix trends, macroeconomic challenges such as low consumer confidence in China and high inflation in Argentina are anticipated to impact performance [10][11]. - Currency headwinds are expected to influence 2024 revenues by 5%, with additional impacts from acquisitions and divestitures [12]. Stock Performance and Valuation - Coca-Cola's shares have risen by 5.3% over the past year, outperforming the broader industry and Consumer Staples sector [14]. - The stock trades at a forward 12-month P/E multiple of 23.99X, higher than the industry average of 20.48X and the S&P 500's average of 18.93X, indicating a potentially stretched valuation [17][19]. Investment Thesis - Coca-Cola holds over 40% market share in the non-alcoholic beverage market, supported by a diverse product portfolio and strategic focus on innovation and digital expansion [21][22]. - Despite near-term challenges, the company is viewed as a strong long-term buy due to solid profitability and a growing global presence [23].