Coca-Cola (KO -0.12%) shares fizzled in 2019, underperforming the market by 10 percentage points. That gap widened during the rally in the year's final weeks as investors showed a preference for buying growth stocks over steady blue-chip giants.

But the beverage titan has a chance to get back in Wall Street's good graces when it reports earnings results for the fiscal fourth quarter and issues its guidance for the year ahead. And, given the recent positive business moment, investors might be pleasantly surprised by what they hear on Thursday, Jan. 30.

Let's take a closer look.

Two women drinking soda.

Image source: Getty Images.

Third time's a charm

Coke's big-picture growth trends are heading in the right direction, but there's still room for improvement. The company in late October announced a 5% boost in organic sales, which edged past management's forecast for the second straight quarter. As a result, CEO James Quincey and his team are now expecting sales to rise by at least 5% for the full year, compared to the 4% target they initially issued.

That sales outlook is more robust than that of rival PepsiCo (PEP -0.55%), which is growing at around 3%. Yet there are a few issues worth watching within Coke's wider expansion profile. For one, the beverage giant is losing market share in the water category. And sales growth overall is tilted toward higher average prices rather than increased drink volumes. To gain confidence that its rebound is strengthening, investors will want to see healthy volume growth reported this week, too. 

Sparkling finances

Coke's earnings trends are better than they might appear at a glance. Yes, non-GAAP (generally accepted accounting principles) profit fell 2% last quarter. However, that figure changes to a 4% increase after you adjust for currency exchange rate moves. The consumer staples giant's core gross and operating profit margins are also on the rise, by that standard. Look for similar behind-the-scenes gains as the company closes out its fiscal year on Tuesday.

Investors are even more excited about Coke's booming cash trends. Free cash flow is up 41% through the first nine months of the year, in fact. Some of that gain can be tied to temporary issues like tax rate changes and the winding down of restructuring expenses. Yet Coke executives said in October that most of the cash flow increase is coming from improved operating trends and added efficiency around the business. That fact raises the prospect of continued gains this quarter and into 2020.

Looking ahead

Assuming Coke achieves its latest annual outlook, management will have the benefit of accelerating momentum behind them when they issue their first sales projection for fiscal 2020. Two consecutive years of 5% organic growth strongly suggests that that's a good rate for investors to bank on over the next few quarters. Even that modest expansion is likely to produce strong profits and surging cash flow, which Coke can soon start directing more toward stock repurchases.

Management said back in October that it would have more comments about these capital spending priorities when it issued its 2020 outlook. Thus, look for hints this week about whether the company's stronger financial support for its dividend is finally freeing Coke up to become an aggressive buyer of its own shares in 2020 and beyond.