What’s Next for Coca-Cola Stock After a Solid Q4 2024?

TradingKey - Fizzy drinks and sugary beverages are falling out of favour with more health-conscious consumers in recent years. That poses a problem for many big drinks companies. Yet one of the biggest, Coca-Cola Co (NYSE: KO) seems to be doing fine.

On Tuesday (11 February) before the market open, the company popped the cap on its Q4 2024 and full-year 2024 earnings – investors were liking the fizz that was served up. Coca-Cola shares finished the trading day up 4.7% on some very solid numbers. Here’s what investors should know about the beverage giant’s quarterly figures.

Higher revenue for Coke comes in ahead of expectations

The soda giant delivered a strong quarter, with revenue climbing 6% year-on-year to US$11.5 billion and organic revenue surging 14%, fuelled by price hikes and increased concentrate sales. 

Earnings per share (EPS) for Coke jumped 12% year-on-year to US$0.51 for the quarter, although full-year EPS dipped slightly to US$2.46 due to currency headwinds and a hefty US$3.1 billion charge related to its Fairlife acquisition.

TradingKey analyst Nick Li noted that Coca-Cola’s steady performance can be attributed to its robust international growth, cost management, and focus on continuous innovation and adaptability. Moreover, despite rising input costs, this company maintained its operating margin at 23.5%（versus 21.0% in the prior year）,thanks to efficient cost management and productivity initiatives.

Investors cheered the results, though, sending Coke shares up on optimism surrounding the large revenue beat, with analysts having expected Q4 2024 to come in at US$10.68 billion. But while the numbers paint a picture of resilience, the real question is: Can Coca-Cola keep the momentum going in 2025?

Growth playbook: More than just bubbles

Coca-Cola’s long game is clear—it’s not just about selling more sodas; it’s about scaling smartly, expanding into new markets, and optimising its distribution network. 

The company is doubling down on high-margin initiatives like returnable glass bottles, which are now rolling out in over 110 markets, and increasing cold-drink equipment placements – adding 250,000 new outlets and nearly 600,000 coolers in 2024 alone.

Looking ahead, Coca-Cola expects organic revenue growth of 5% to 6% in 2025. However, currency fluctuations could take a 3% to 4% bite out of net revenues, and comparable EPS growth is projected at just 2% to 3%, as currency headwinds shave off 6% to 7% of potential gains.

Despite these pressures, the company is laser-focused on maintaining its dominance in the non-alcoholic beverage space. Its recent earnings call highlighted a push into localised pricing, aggressive distribution expansion, and sustainable packaging – all moves designed to ensure long-term market share gains.

Coca-Cola’s management expect adjusted organic revenue to grow by 5% to 6%, and project a comparable currency-neutral EPS growth of 8% - 10% in 2025. Li said: " With inflation set to moderate this year, the company anticipates that revenue target range remains quite solid. Coca-Cola is still a safe pick in consumer staples sector."

What could go flat for Coke?

While Coke has a solid game plan, there are a few risks to watch. Currency volatility is a major headwind, particularly in high-inflation markets like Argentina and parts of Africa. The company also faces rising tax pressures, with its 2025 effective tax rate expected to increase to 20.8%, driven by new global minimum tax regulations.

Then there’s the evolving consumer landscape. The rise of health-conscious consumers and the increasing popularity of GLP-1 weight-loss drugs could shift demand away from traditional sodas given their high sugar content. 

However, Coke is adapting to the shifting landscape, with strong momentum in value-added dairy (thanks to Fairlife), tea (like Fuze Tea), and even alcohol-adjacent offerings like Jack and Coke.

Resilient stock with steady dividends

Coke has proven time and again that it can navigate economic turbulence. It’s a classic "all-weather" stock – one that continues to generate solid free cash flow (US$10.8 billion in 2024, excluding a US$6 billion IRS tax deposit) and reward investors with dividends. 

The company has raised its dividend for 62 consecutive years, making it a reliable income stock for those who are into seeing dividends on a regular basis.

So, what’s next? The beverage giant is playing the long game, investing heavily in its brand, distribution, and product innovation. While 2025 won’t be without challenges, Coca-Cola’s ability to adapt and execute should keep investors confident that the soda giant isn’t losing its fizz any time soon.