When you own shares in Coca-Cola (NYSE:KO), the world's largest beverage company, your worst dreams probably start with words like this: "We are not satisfied with our performance in 2004. By most measures, we did not perform to our potential or the expectations of our shareowners."

Well, those are the words from the Coke CEO announcing the company's 2004 fourth-quarter and full-year results. Yes, the company sees 2004 as a transition year and says that growth will accelerate. But Coke's poor 2004 performance led to a 17.9% decline in the stock last year -- and, being one of the five worst performers in the Dow 30, it also earned entry into the Pigs of the Dow with such underachievers as Merck (NYSE:MRK), General Motors (NYSE:GM), and Pfizer (NYSE:PFE).

Looking for healthy fourth-quarter growth? (And a 2% increase in sales doesn't cut it!) How about the 30% increase in net income? Although currency, lower taxes, and other factors helped inflate that number, so did a 4.5% increase in operating margins to 25.6%. Besides dwarfing the 19.9% margins at PepsiCo (NYSE:PEP), that margin increase came at a time when Coke is ramping up marketing expenses.

Consider, too, that the company likes its prospects so much that it purchased $1.7 billion of its own shares in 2004 and plans to spend at least $2 billion for repurchases in 2005.

Those looking for trouble spots will notice that even with $5.1 billion in free cash flow in 2004, the company still increased its total debt by $1.8 billion, to $7.2 billion. Yes, the company does turn every dollar of sales into a quarter of earnings -- and it has roughly as much cash as debt on the balance sheet. But Coke is a cash cow, and you would expect that the company would want to build a conservative cash-laden balance sheet.

It's been two months since the Motley Fool Inside Value newsletter recommended Coke, and the stock is up 6.6% since then. At the time, Philip Durell saw Coke's intrinsic value at $52 a share. With improving margins, and with Coke selling for 20.3 times free cash flow to enterprise value (vs. 27.3 times for Pepsi), that intrinsic value looks to be on target, and the stock is still value-priced.

See what Philip Durell is recommending now by trying a free subscription to the Motley Fool Inside Valuenewsletter -- a must-read at Fool contributor W.D. Crotty's house. While W.D. loves a cold Coke, especially on a hot, humid Florida day, he does not own stock in any of the companies mentioned. Clickhereto see The Motley Fool's disclosure policy.