Will Coca-Cola’s Q1 results benefit from demand recovery and higher prices?

The Coca-Cola Company (NYSE: KO) is all set to report results for the first quarter of 2025, relying on its all-weather strategy to navigate headwinds like high input costs and changing customer behavior. Its strategic approach to packaging and pricing ensures accessibility across all customer segments, from high-income consumers to those on a budget. While tariff-related trade tensions may pose some challenges for the business, their impact is expected to be relatively low as the company manufactures its products locally in most countries.

Estimates

The company will publish its first-quarter numbers on April 29, at 6:55 am ET. Market watchers’ consensus estimate is for earnings of $0.72 per share for the March quarter, on an adjusted basis, which matches earnings reported in the year-ago quarter. First-quarter revenue is expected to remain broadly unchanged at $11.2 billion. Earlier this year, the Coca-Cola leadership cautioned that Q1 revenue and earnings may include currency headwinds of 3-4% and 5-6%, respectively, on an adjusted basis.

The company’s stock, which has been on an upward spiral for some time, set a new record soon after opening on Tuesday. That is well above its 52-week average price of $66.35. KO has significantly outperformed the S&P 500 index over the past 12 months. Despite the recent gains, the stock appears to be a good long-term investment, given Coca-Cola’s pricing power and consistent profitability. In addition, the company has regularly increased its dividend payouts for over six decades.

“We won overall share and had broad-based share gains across our global beverage categories. We’re making progress across our total beverage portfolio delivering ongoing growth in sparkling soft drinks as well as momentum in other categories like value-added dairy and tea, which are reaching global scale while remaining tailored to local consumer needs. And we’re continuing to strengthen alignment across our system and we believe our global franchise model, which operates locally, is an advantage to drive long-term balanced growth,” CEO James Quincey said in the Q4 2024 earnings conference call.

Stable Demand

In Q4 2024, Coca-Cola’s adjusted EPS rose to $0.55 from $0.49 in the comparable period in the prior year. Unadjusted net income was $2.20 billion or $0.51 per share in Q4, compared to $1.97 billion or $0.46 per share in the year-ago period. The positive top-line performance reflects a 6% year-over-year increase in revenues to $11.54 billion. Continuing the long-term trend, both profit and the top line beat Wall Street’s estimates.

Coca-Cola has delivered strong volume growth across markets in recent quarters, even as high inflation and supply chain disruptions weigh on most consumer staples companies. This resilience can be attributed to the company’s effective market strategy and ongoing innovation. Overall, demand for Coca-Cola’s products has been stable in recent years, although some consumers remain cautious in their spending due to inflationary pressures on household budgets. This trend is expected to continue in fiscal 2025.

After maintaining a steady uptrend in recent weeks, Coca-Cola’s shares traded up 2% in the early hours of Tuesday’s session.