Fizzing Higher: Coca-Cola Is Outperforming Ahead of Earnings

Core Viewpoint - Coca-Cola demonstrates resilience in turbulent markets, showcasing its defensive attributes and strong brand power, making it a compelling investment option for stability-focused investors [2][18][19] Market Performance - Coca-Cola's stock surged approximately 19.7% in the three months leading to late April 2025, with a year-to-date gain of about 18.8%, contrasting with the S&P 500's decline of around 10% [3][4] - The company's low beta of 0.45 indicates lower volatility compared to the market average, enhancing its appeal during market downturns [4] Dividend Information - Coca-Cola has a dividend yield of 2.83% and has increased its annual dividend for 63 consecutive years, solidifying its status as a Dividend King [6][7] - The latest quarterly dividend was raised by approximately 5.2%, resulting in an annual dividend of $2.04 per share, up from $1.94 in 2024 [7][9] - The dividend payout ratio is reported at 82.6%, but a more sustainable ratio based on comparable EPS is 70.8% [8] Financial Performance - In FY2024, Coca-Cola's organic revenues increased by 12%, driven by an 11% improvement in price/mix, indicating strong pricing power [10] - The Comparable Operating Margin expanded to 30.0% in FY2024 from 29.1% the previous year, despite increased input costs [11] - Comparable EPS increased by 7% to $2.88 in FY2024, even after a significant currency headwind [13] Cash Flow and Operational Efficiency - Reported cash flow from operations decreased by 41% to $6.8 billion in FY2024, impacted by a $6.0 billion deposit related to tax litigation [14] - Excluding this item, Free Cash Flow reached $10.8 billion, an 11% increase year over year, highlighting strong cash-generating capabilities [14] Strategic Initiatives - Coca-Cola is expanding its product portfolio in response to evolving consumer preferences, including categories like water, sports drinks, and low/no-sugar options [15] Analyst Sentiment - Analysts maintain a strong consensus Buy rating for Coca-Cola, with a 12-month price target of $75.06, suggesting a potential upside of 4.31% [16] - The company's management projects solid growth in organic revenue and comparable EPS for the fiscal year, despite anticipated currency headwinds [17]