Beverage company Coca-Cola (NYSE: KO) met Wall Street’s revenue expectations in Q1 CY2025, but sales were flat year on year at $11.13 billion. Its non-GAAP profit of $0.73 per share was 1.9% above analysts’ consensus estimates.
Is now the time to buy Coca-Cola? Find out by accessing our full research report, it’s free.
Coca-Cola (KO) Q1 CY2025 Highlights:
- Revenue: $11.13 billion vs analyst estimates of $11.15 billion (flat year on year, in line)
- Adjusted EPS: $0.73 vs analyst estimates of $0.72 (1.9% beat)
- 2025 Guidance: maintained 5-6% organic revenue growth and 2-3% EPS growth
- Operating Margin: 32.9%, up from 19.1% in the same quarter last year
- Free Cash Flow was -$5.51 billion, down from $158 million in the same quarter last year
- Organic Revenue rose 6% year on year (11% in the same quarter last year)
- Sales Volumes rose 2% year on year (1% in the same quarter last year)
- Market Capitalization: $309 billion
Company Overview
A pioneer and behemoth in carbonated soft drinks, Coca-Cola (NYSE: KO) is a storied beverage company best known for its flagship soda.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
With $46.8 billion in revenue over the past 12 months, Coca-Cola is one of the most widely recognized consumer staples companies. Its influence over consumers gives it negotiating leverage with distributors, enabling it to pick and choose where it sells its products (a luxury many don’t have). However, its scale is a double-edged sword because there are only so many big store chains to sell into, making it harder to find incremental growth. To accelerate sales, Coca-Cola likely needs to optimize its pricing or lean into new products and international expansion.
As you can see below, Coca-Cola’s sales grew at a tepid 5.2% compounded annual growth rate over the last three years, but to its credit, consumers bought more of its products.
This quarter, Coca-Cola’s $11.13 billion of revenue was flat year on year and in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 3.8% over the next 12 months, similar to its three-year rate. This projection is underwhelming and implies its products will face some demand challenges.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
Volume Growth
Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
To analyze whether Coca-Cola generated its growth from changes in price or volume, we can compare its volume growth to its organic revenue growth, which excludes non-fundamental impacts on company financials like mergers and currency fluctuations.
Over the last two years, Coca-Cola’s average quarterly volume growth was a healthy 1.3%. Even with this good performance, we can see that most of the company’s gains have come from price increases by looking at its 11.1% average organic revenue growth. The ability to sell more products while raising prices indicates that Coca-Cola enjoys some degree of inelastic demand.
In Coca-Cola’s Q1 2025, sales volumes jumped 2% year on year. This result was an acceleration from its historical levels, certainly a positive signal.
Key Takeaways from Coca-Cola’s Q1 Results
It was encouraging to see Coca-Cola beat analysts’ organic revenue expectations this quarter. We were also happy its EPS also outperformed Wall Street’s estimates. Looking ahead, the company maintained its previously-provided full-year guidance, which is comforting given the choppy macro backdrop. Overall, this was a solid quarter. The stock traded up 1.5% to $72.85 immediately after reporting.
Big picture, is Coca-Cola a buy here and now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
