To The Moon

Insights:

1. Coca-Cola's performance over the past few quarters indicates steady recovery, supported by its strong moat, providing ample room for price appreciation.

2. As a consumer staple giant, Coca-Cola effectively combats inflationary pressures through pricing strategies, though macroeconomic risks in consumer recovery must be cautiously managed.

3. The stock's continued high volatility over the past two years reflects market uncertainty. Given the current lack of consumer momentum, investors should await more favorable opportunities. Long-term holding is advisable for Coca-Cola investments.

Financial Analysis: Revenue Growth Surpasses Expectations, Profit Performance Moderate

Revenue:

Coca-Cola's revenue for the fourth quarter reached $10.85 billion, a 7.2% year-over-year increase, surpassing market expectations of $10.65 billion. Revenue growth primarily relied on organic growth, with price increases driving the majority of the growth.

Profit:

In terms of profit, Coca-Cola's fourth-quarter net profit attributable to the company was $1.973 billion, a 3% year-over-year decrease, with earnings per share of $0.46, slightly lower than previous expectations. Non-GAAP net profit was $2.13 billion, a 10% year-over-year increase, with non-GAAP earnings per share of $0.49, an 8.9% increase over the same period last year. The variance between GAAP and non-GAAP profits primarily stems from external factors such as asset impairments and stock transactions.

Operational Analysis: Price Increases Drive Revenue Growth, Macro Consumer Risks, Performance Guidance Exceeds Expectations

Price-Driven Revenue Growth:

In recent quarters, large consumer blue-chip companies like Coca-Cola and PepsiCo have largely relied on price increases to drive organic revenue growth amid inflationary risks. In this quarter, Coca-Cola's organic revenue grew by 12% year-over-year, with price/mix contributing 9%, and unit sales increasing by 2%.

Consumer Macro Risks:

As a global leader in the carbonated beverage market, Coca-Cola effectively manages various risks through its strong brand power and market position. While the company navigates inflationary pressures through price adjustments, sustained price hikes may adversely affect sales volume, posing a challenge to the balance between pricing and sales.

Performance Guidance Exceeds Expectations:

Coca-Cola's performance guidance for 2024, with organic revenue growth expected to range between 6% and 7%, surpasses analysts' expectations of 5.9%. This outlook reflects the company's continued expansion and enhanced market competitiveness globally, demonstrating strong growth certainty. Additionally, the company forecasts earnings per share growth of 4%-5%.

It's worth noting that this performance guidance considers the uncertainty of the global economic environment. Despite complex international situations and slow global economic recovery, Coca-Cola's ability to maintain steady performance expectations underscores its robust market adaptability and risk resilience.

In summary, Coca-Cola, as a consumer staple giant, has shown stable performance over recent quarters, benefiting from its robust brand power and market position. Despite effectively combating inflation through pricing strategies, caution is warranted regarding macroeconomic pressures on consumer recovery. With current market consumer sluggishness and high stock price volatility, investors should wait for better entry points. Long-term holding is recommended, given Coca-Cola's promising long-term growth prospects.

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