Coca-Cola (KO) stock rose on Tuesday after the company easily beat Wall Street estimates for its quarterly sales thanks to resilient global demand and higher prices, although currency headwinds impacted full-year profits.
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Organic revenues at the Sprite and Minute Maid maker grew 14% in the Fiscal fourth quarter, while net revenues were up 6% to $11.5 billion against an expected decline of over 2% to $10.68 billion. KO said the rise was driven by 9% growth in price/mix and a 5% increase in sales.
Earnings per share (EPS) of $0.55 for Q4 beat estimates for $0.52. Shares of KO rose over 3% in Tuesday’s premarket trading session.
“Our all-weather strategy is working, and we continue to demonstrate our ability to lead through dynamic external environments,” said CEO James Quincey as the company also reported it had gained market share in total non-alcoholic ready-to-drink beverages.
Currency Headwinds Weigh but are No Knockout for KO
Currency headwinds from the strong U.S. dollar impacted full-year profits as operating income fell 12%. On a currency neutral basis, however, operating income was up 16% for the year after rising 22% in Q4.
KO said its $0.55 comparable EPS included an 11-point currency headwind. For the full year, EPS declined slightly to $2.46, while comparable EPS grew 7% to $2.88. Both would have been nine points higher had it not been for the currency impact.
The currency impact was most keenly felt in Latin America, where Mexico is its biggest market by far, after a steep fall in the value of the Mexican peso either side of the U.S. election.
KO also said it took a charge in the year of $3.1 billion related to its 2020 acquisition of milk brand Fairlife.
Is KO Stock a Good Buy?
On Wall Street, analysts have a Strong Buy consensus rating on KO stock based on 12 Buys and one Hold assigned in the past three months. After a 10% rally in its share price over the past year, the average KO price target of $71.46 per share implies around 10% upside potential. The price target could change after the latest earnings update.
