Coca-Cola Earnings: Focus on Volume Expansion Prudent for Long-Term Sales and Profit Growth

We don’t plan any material changes to our $60 fair value estimate for wide-moat Coca-Cola after digesting its 2023 results, as sales growth of 6% and adjusted EPS of $2.69 matched our estimates. Despite a softening consumer backdrop and intense competition in the beverage aisle, we think Coca-Cola remains well-positioned to capture growth in the coming years thanks to heavy investments in innovations and brands, and deft in-market executions that assert its competitive standing globally. For 2024, we view management’s outlook for mid-single-digit sales growth as reasonable after adjusting for the impact of refranchising but plan to trim our adjusted EPS estimate by a low-single-digit percentage due to worse-than-expected near-term currency headwinds. Our 10-year projections for mid-single-digit sales growth and low-30s average operating margins remain in place.