In some ways, Coca-Cola is still in recovery mode.
Coca-Cola (KO -0.14%) is one of Warren Buffett's favorite stocks, and this Dividend King has rewarded shareholders with increasing, high-yielding dividends for more than six decades.
But believe it or not, it's still in the middle of a recovery after sales fell off a cliff several years ago, and 2024 might signal the culmination of that recovery. Let's dig in and see how it's likely to play out, and why it's important to investors.
Coca-Cola hasn't always been a beverage superstar
Many people think of Coca-Cola as the prime beverage superstar. It's the largest beverage company in the world, with $46 billion in trailing-12-month revenue, and sales have steadily increased since bottoming out early in the pandemic; they're up almost 37% since the worst of that time.
But the problem started well before that. Coca-Cola was becoming too big to control, and it was a disorganized and rigid global operation. Current CEO James Quincey took the reins in 2017, when sales fell a full 15% for the year. He set out a strategy to pull the company together, reorganizing the bottling ventures and creating a fast and agile distribution network.
The pandemic threw a wrench into Coca-Cola's progress, but it reorganized again, and it's now working better and faster. However, revenue remains below where it was 10 years ago. It's getting very close, though, and it's likely to finally surpass that target in the 2024 second quarter:
KO Revenue (TTM) data by YCharts.
Coca-Cola might be better than ever
There's good reason to believe co*ke can continue on its growth trajectory under Quincey's steady guidance. One of the major moves it made early in the pandemic was slashing its brand portfolio by about half, from 400 to 200 brands. That's a bold action that freed up resources to devote to its core assets, and Coca-Cola's eponymous brands continue to be its main attractions. Management said that it owns 26 different brands that each bring in more than $1 billion annually, and these main brands are key to future growth.
It's not letting it go at that, though. The brands it got rid of were small, mostly local underperformers responsible for about 2% of volume and 1% of revenue. Coca-Cola is still acquiring new brands, but it's focused on top global brands that have robust opportunities in larger markets. For example, it acquired Bodyarmor in 2021, when the brand was growing sales at a rapid clip. Bodyarmor is now one of the company's $1 billion brands.
Acquisitions can be an important growth driver because when co*ke adds new drinks to its systems, they can reach new customers with great efficiency. That can lead to a big boost in revenue, at least initially, without adding commensurate expenses.
With this twin growth strategy of investing in its core brands and acquiring new ones to boost sales, Coca-Cola is well positioned to use its distribution network effectively and generate higher sales and profits. It's touching the tip of its previous record sales figures, and it should easily go higher.
Is now the time to buy Coca-Cola stock?
Coca-Cola has been a reliable dividend superstar for decades, but its stock price hasn't been as impressive, trailing the broader market for most of the past 30 years. That doesn't make it a loser; on the contrary, most individual stock portfolios benefit from having some stable high-value and dividend stocks that anchor their holdings.
Coca-Cola stock offers stability, value, and reliable passive income. And as it's poised to set a record for annual sales this year, this is a great time to buy the stock.
Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
FAQs
You would have more than doubled your money, with a total investment worth of $2,029.55. That's a 103% return, or a 7.23% annual rate of return. Interestingly, despite co*ke's dominance on the world stage, investing in co*ke's main rival, Pepsi, 10 years ago would have given you more pop for your buck.
What is the future performance of Coca-Cola? ›
Coca-Cola is forecast to grow earnings and revenue by 7.2% and 4% per annum respectively. EPS is expected to grow by 7.5% per annum. Return on equity is forecast to be 45.8% in 3 years.
Is Coca-Cola over valued? ›
Fair Value Estimate for Coca-Cola
With its 3-star rating, we believe co*ke's stock is fairly valued compared with our long-term fair value estimate of $60 per share, which implies a 22 times multiple against our adjusted 2024 earnings estimate and a 2024 enterprise value/adjusted EBITDA multiple of 20 times.
Is Coca-Cola good for long term investment? ›
Economic Moat Rating
We believe co*ke has built a wide moat around its global beverage operations, based on strong intangible assets and a significant cost advantage that will enable the company to deliver excess investment returns above its cost of capital over and beyond the next 20 years.
What is the dividend on $100 shares of Coca-Cola? ›
The Coca-Cola Company's ( KO ) dividend yield is 3.09%, which means that for every $100 invested in the company's stock, investors would receive $3.09 in dividends per year. The Coca-Cola Company's payout ratio is 73.72% which means that 73.72% of the company's earnings are paid out as dividends.
How long would it take $1000 to double if it was invested in a bank that paid 6% per year? ›
The answer is: 12 years.
What is the goal of Coca-Cola in 2030? ›
Now, by 2030, our science-based target is to reduce absolute greenhouse gas emissions by 25% compared with a baseline set in 2015.
What is the future prediction for Coca-Cola? ›
The Coca-Cola Company Stock Forecast
The 12 analysts with 12-month price forecasts for KO stock have an average target of 68.33, with a low estimate of 60 and a high estimate of 74. The average target predicts an increase of 10.74% from the current stock price of 61.71.
Is Coca-Cola growing or declining? ›
Although trademark Coca-Cola likely accounts for the bulk of total sales, it's not the fastest-growing. In the 2023 fourth quarter, trademark Coca-Cola sales increased 2% over last year, but juice, value-added dairy, and plant-based beverages increased 6%.
Who is more valuable Pepsi or co*ke? ›
At roughly $246 billion on Monday, Coca-Cola's market cap is more than $15 billion above PepsiCo's. Coca-Cola has long held the top spot in part due to its strong brand portfolio and record of sales growth.
The broad story here is fairly straightforward. As inflation began to take off in 2021 and 2022, that impacted beverage makers like Coca-Cola and Pepsi, which pointed to higher costs coming from a variety of angles, including aluminum cans, packaging, labor, and general supply chain woes.
Does co*ke sell more than Pepsi? ›
Since 2004, Coca-Cola Company has been the market leader, according to industry statistics. Pepsi ranks second, followed by Keurig Dr. Pepper.
Who is Coca-Cola's biggest competitor? ›
The Coca-Cola Corporation, which has been around for over 130 years, and PepsiCo, with roots dating back to 1898, have been long-term competitors for ages. With its market value, the multinational food and beverage company PepsiCo directly follows Coca-Cola in the ranking of the largest companies in the world.
Did Warren Buffett invest in Coca-Cola? ›
Warren Buffett bought more than $1 billion in shares of the Coca-Cola Company (KO) in 1988, an amount that was then equivalent to 6.2% of the company. The purchase made it the single largest position in Buffett's Berkshire Hathaway Inc.
What is Coca-Cola's biggest expense? ›
Question: 1. The biggest expense for Coca-Cola is advertising, which is part of selling, general, and administrative expenses.
Does invested money double every 10 years? ›
The Rule of 72 is focused on compounding interest that compounds annually. For simple interest, you'd simply divide 1 by the interest rate expressed as a decimal. If you had $100 with a 10 percent simple interest rate with no compounding, you'd divide 1 by 0.1, yielding a doubling rate of 10 years.
What will Coca-Cola stock price be in 2030? ›
Long-Term Coca-Cola Stock Price Predictions
| Year | Prediction | Change |
|---|
| 2027 | $ 70.17 | 11.45% |
| 2028 | $ 72.75 | 15.55% |
| 2029 | $ 75.43 | 19.80% |
| 2030 | $ 78.20 | 24.20% |
2 more rowsHistorical daily share price chart and data for Coca-Cola Consolidated since 1990 adjusted for splits and dividends. The latest closing stock price for Coca-Cola Consolidated as of May 29, 2024 is 984.84. The all-time high Coca-Cola Consolidated stock closing price was 1009.31 on May 07, 2024.
What was the price of Coca-Cola in 2009? ›
The closing price for Coca-Cola (KO) in 2009 was $18.34, on December 31, 2009. It was up 29.9% for the year. The latest price is $61.82.
