Coca-Cola (KO -0.34%) stock posted substantial gains in Tuesday's trading. The beverage giant's share price ended the session up 4.7% in a day of trading that saw the S&P 500's (^GSPC -0.39%) level wind up approximately in line with yesterday's close.
Coca-Cola reported its fourth quarter results before the market opened this morning and posted results that beat the average Wall Street targets. The company recorded non-GAAP (generally accepted accounting principles) adjusted earnings per share of $0.55 on sales of roughly $11.5 billion in the quarter, topping the average analyst estimate's call for per-share earnings of $0.52 on sales of $11.42 billion.
Coca-Cola stock rises after posting strong results across the board
Coca-Cola's revenue increased 6.5% year over year in the fourth quarter, and adjusted earnings per share increased 12% compared to the prior-year period. Meanwhile, currency adjusted operating income increased 22% compared to Q4 in the previous year.
Coke's better-than-expected performance in the quarter was driven primarily by pricing increases and strong performance in key geographic segments. While total case volume for the period was just 2% year over year, organic revenue increased 14% and blew by the average Wall Street target's call for growth of roughly 7%.
The company said that it had achieved broad-based market share gains in key product categories and continued to notch margin improvements. It was a strong quarter for the beverage leader, and management also issued encouraging guidance for 2025.
What's next for Coca-Cola?
For this year, Coca-Cola is guiding for adjusted organic revenue to increase between 5% and 6%. While that target range is significantly below what the company posted in Q4, the performance last quarter was unexpectedly strong. With inflation expected to moderate this year, the company is guiding for lower revenue growth -- and the target range still looks very solid.
With expectations that adjusted earnings per share will increase between 8% and 10%, management's profit outlook was even more encouraging. Meanwhile, adjusted free cash flow (FCF) is projected to come in at approximately $9.5 billion -- marking a big improvement over the $4.7 billion in FCF it posted last year.
With today's gains, the stock is now trading at roughly 23 times this year's expected earnings. That valuation might not look particularly cheap, given the company's projected rate of earnings growth, but investors are getting an industry leader that pays a reliable dividend with Coca-Cola stock.
