Coca-Cola (KO) Earnings Preview: Can Volume Growth Reignite Momentum?

Coca-Cola is set to release its fourth-quarter earnings report tomorrow before the market opens, followed by an investor call at 8:30 AM ET. Given the company’s strong track record of delivering consistent results, analysts and investors are watching closely to see if the beverage giant can maintain its momentum despite recent foreign exchange headwinds and uneven consumer demand across different regions.

The consensus expectations, according to FactSet, call for adjusted earnings per share (EPS) growth of 6 percent year-over-year to $0.52, while revenue is projected to decline by 1 percent to $10.68 billion. Historically, Coca-Cola has rarely disappointed Wall Street, with a track record of beating earnings estimates in every quarter for over five years.

The company also routinely surpasses revenue expectations, making a potential miss in Q4 a surprising development that could pressure the stock price, which has found steady support in the $60-$63 range.

Key Factors to Watch in Coca-Cola’s Q4 Report

1. Revenue Trends and Foreign Exchange Headwinds

- Coca-Cola's ability to grow organic revenue is a critical factor, especially given the adverse impact of foreign exchange fluctuations on reported net sales.

- In Q3, the company managed to deliver 9 percent organic revenue growth despite a 0.8 percent decline in reported revenue. This quarter, investors will be watching to see if Coca-Cola can sustain similar organic growth.

2. Volume Growth as a Leading Indicator

- One of the biggest concerns in Q3 was a 1 percent year-over-year decline in volume growth, marking a shift from the 2 percent increase recorded in Q2.

- Management previously stated that volume declines in Q3 were largely due to a slow start in July, with trends improving in subsequent months.

- If Coca-Cola shows sequential improvement in Q4, it would align with what rival PepsiCo recently reported, where beverage volume growth turned positive again at 1 percent following a 2 percent decline in Q3.

- In North America, where Coca-Cola has consistently outperformed PepsiCo, a strong showing would further solidify the company's market position.

3. Regional Performance and Consumer Demand

- Latin America remains a bright spot for Coca-Cola, with the company expecting continued volume growth despite aggressive pricing strategies in prior quarters.

- Last quarter, even with a 21 percent increase in price/mix, Latin American volumes remained flat, signaling resilient consumer demand.

- In contrast, economic pressures in China and the Middle East have weighed on consumer spending, making it unclear whether demand in these regions will recover meaningfully in the near term.

4. Guidance for Fiscal Year 2025

- Investors will also be focused on Coca-Cola’s full-year outlook for 2025. The company typically provides non-GAAP earnings and revenue guidance.

- Analysts currently expect full-year EPS of $2.95, a modest increase from the company’s prior full-year expectation of $2.82 in 2024.

- Any deviation from these expectations—whether an upward revision or a more conservative outlook—could drive market reaction following the earnings release.

Stock Performance and Market Sentiment

Coca-Cola's stock has been in a period of consolidation, down approximately 12 percent from its highs in September. The company’s performance has largely mirrored the broader consumer staples sector, which has faced headwinds from slowing consumer demand and high interest rates that have pressured valuations in defensive stocks.

However, Coca-Cola has gained roughly 3 percent since the start of 2025, suggesting that investors are positioning for a potentially positive earnings report. If Q4 results demonstrate an improvement in volume trends and strong organic revenue growth, the stock could break out of its recent range and challenge its 200-day moving average at $65.37.

Final Thoughts

Coca-Cola's Q4 report will be a crucial test for the company as it seeks to maintain its reputation for consistent financial performance. Investors will be watching closely for any signs of further volume recovery, particularly in North America and Latin America, as well as management’s outlook for 2025.

While foreign exchange headwinds and macroeconomic pressures remain concerns, Coca-Cola’s ability to offset these challenges with strong organic growth and disciplined pricing strategies will determine whether the stock can regain momentum in the coming months.