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If both operating formats resume low-single-digit growth while build spending normalizes, free cash flow could improve because less cash would be absorbed by investment.
Operating cash remains below $0.60 per $1.00 of reported profit for two consecutive fiscal years.
Sell. The $88.07 report-date price on 2026-09-04 stands above Fair value of $57.11 and Potential value of $77.38.3
The main risk is that reported profit keeps converting poorly into operating cash. FY2025 produced $7.41 billion of operating cash against $13.11 billion of net income.5
If that weakness persists, less cash remains for investment and dividends. A second fiscal year below $0.60 of operating cash per $1.00 of profit would confirm deterioration.
The clearest upside route is renewed low-single-digit sales growth across both operating formats while capital spending normalizes. That combination would lift cash available to shareholders.
The constructive cycle is demand-led. Low-single-digit sales growth combined with lower investment intensity would release cash without requiring peak FY2025 profitability to continue.15
Sell because the report-date price exceeds Potential value while weak operating cash and near-flat FY2027 revenue limit support.15
The constructive cycle is demand-led. Low-single-digit sales growth combined with lower investment intensity would release cash without requiring peak FY2025 profitability to continue.15
Sell because the report-date price exceeds Potential value while weak operating cash and near-flat FY2027 revenue limit support.15
COCA COLA CO operates in the highly competitive commercial beverage industry. COCA COLA CO faces strong competition from numerous other general and specialty beverage companies. Its Company recognizes revenue when performance obligations under the terms of the contracts with its customers are satisfied. Its performance obligation generally consists of the promise to sell concentrates, syrups or finished products to its bottling partners, wholesalers, distributors or retailers. The business of its Company is primarily nonalcoholic beverages.
Its EMEA operating segment also includes the results of the Costa business (excluding the ready-to-drink business), regardless of the location of the retail stores. For additional information about its operating segments and Corporate, refer to Note 20 of Notes to Consolidated Financial Statements set forth in Part II, “Item 8. Financial Statements and Supplementary Data” of this report. Its organizational structure consists of the following operating segments: EMEA; Latin America; North America; Asia Pacific; and Bottling Investments. Its operating structure also includes Corporate, which consists of a center and a platform services organization.
These are conditional, standalone stresses. They should not be added mechanically because several can reflect the same operating weakness.
This path is confirmed if contraction persists, margins fall and build spending fails to normalize over the stated review windows.
Repeated weak conversion cuts dividend-supporting cash.
Elevated investment keeps absorbing distributable cash.
The five developments that would weaken our investment case.
Reported profit would keep overstating cash available for reinvestment and dividends, lowering distributable cash and weakening value per share directly.
Current:FY2025: $0.57 per $1.00 of reported profit.
Alert ifBelow $0.60 again in FY2026.
Spending would remain structural rather than temporary, absorbing cash without a matching demand payoff and reducing cash available to shareholders.
Current:
Operating breadth supports resilience, but it does not establish switching costs, network effects, cost advantage or efficient scale. Concentrate and finished-product operations are both material outcomes, not structural moat sources.
The peer set is a cross-check, not a group of interchangeable businesses. PEP and MNST are closer beverage comparisons, while PG and CL are broader staples companies with different growth and profitability.
FY2025 operating income was $13.76 billion, yet that outcome cannot establish a moat without evidence of a lasting structural mechanism.5
Each lens answers a different valuation question. Only included lenses set Fair value; floors and diagnostics provide context.
Apply a terminal P/E to the dated forward path, then discount that future share value back to the analysis date.
None of the valuation methods used to calculate Fair value relies on a separate assumption about how long the competitive advantage lasts.
The highlighted cell is Fair value when every assumption sits at its base level ($57.11). Each row and column shows what Fair value becomes when one assumption moves.
Free cash flow to the firm stays positive in the first projected year at $10.6B after modeled reinvestment of $842.6M, with terminal value at 76.8% of enterprise value. A sudden drop in free cash flow is not projected unless capital spending relative to revenue, reinvestment, or gross margin resets materially.
By FY2029, both operating formats must support positive consolidated growth while capital spending begins releasing cash. Continued near-zero growth would disconfirm this path.6
One earnings beat would not prove durable cash conversion or completed investment normalization.
Results matching estimates would not change the central concern: the $57.11 fair-value midpoint remains well below the current $88.07 share price.
A miss tied to weaker sales, margins or cash would confirm that the FY2025 profit level was not durable.
Earnings remain positive, but FY2025 operating cash was materially below reported profit. A headline beat matters less than better conversion into cash.5
FY2025 free cash flow was $5.30 billion after $2.11 billion of capital spending. A recovery requires operating cash to improve while build spending normalizes. These figures address cash generation, not debt or liquidity capacity, so they do not establish an inability to meet obligations.45
Capital spending rose from $1.85 billion in FY2023 to $2.11 billion in FY2025. Diluted average shares declined modestly across the same period, so repurchases are not a major independent growth engine.
Operating profit rose in FY2025, but profit alone does not establish the direction of return on invested capital.
The established company-wide financing cost is 6.6154% as of 2026-09-08. No spread is inferred from operating income alone.
FY2025 net income was $13.11 billion, while operating cash flow was $7.41 billion.
Reported earnings should not be treated as cash available to shareholders until conversion improves.
FY2027 adjusted diluted EPS is estimated at $3.53, while revenue is estimated at $49.85 billion.
| Revenue | $47,941,000,000 |
|---|---|
| Cost of revenue | $18,397,000,000 |
| Gross profit | $29,544,000,000 |
| Operating expenses | $15,782,000,000 |
| Operating income | $13,762,000,000 |
| Non-operating items and tax | -$655,000,000 |
| Net income | $13,107,000,000 |
| Total assets | $104,816,000,000 |
|---|---|
| Cash | $10,270,000,000 |
| Current assets | $31,044,000,000 |
| Total liabilities | $70,541,000,000 |
| Current liabilities | $21,281,000,000 |
| Shareholders’ equity | $34,275,000,000 |
| Net income | $13,107,000,000 |
|---|---|
| Operating inflow | $14,436,000,000 |
| Depreciation and amortization | $1,050,000,000 |
| Stock-based compensation | $279,000,000 |
| Operating cash flow | $7,408,000,000 |
| Operating outflow | $7,028,000,000 |
| Cash available | $19,217,000,000 |
| Beginning cash | $11,488,000,000 |
| Exchange-rate effect | $321,000,000 |
| Investing outflow | $67,000,000 |
| Financing outflow | $8,140,000,000 |
| Ending cash | $11,010,000,000 |
| Investing cash flow | -$67,000,000 |
| Financing cash flow | -$8,140,000,000 |
Source: SEC EDGAR · Filed 2026-02-20 · SEC EDGAR
| Revenue by business category | Revenue | Share | YoY |
|---|---|---|---|
| Concentrate Operations | $28.5B | 59.4% | 2.7% |
| Finished Product Operations | $19.5B | 40.6% | 0.7% |
Point-in-time financial data used in the 2026-09-08 analysis.
| Period | Revenue | EBITDA | Net income | Operating cash flow | Free cash flow | Capex | Depreciation and amortization | Stock-based compensation | Share repurchases | Dividends paid | Net debt issuance | Investing cash flow | Financing cash flow | Beginning cash | Ending cash | Cash and investments | Total debt | Operating margin | ROIC | WACC | ROIC − WACC spread |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2016-12-31 | $41.9B | $10.7B | $6.5B | $8.8B | $6.5B | $2.3B | $1.8B | $258M | $3.7B | $6B | — | -$1B | -$6.5B | — | $8.9B | $22.2B | $33.2B | 20.7% | — | 4.7% | — |
| 2017-12-31 | $36.2B | $9B | $1.2B | $7B | $5.3B | $1.8B | $1.3B | $219M | $3.7B | $6.3B | — | -$2.3B | -$7.4B | $8.9B | $6.4B | $20.8B | $34.5B | 21.4% | — | 4.5% | — |
| 2018-12-31 | $34.3B | $10.3B | $6.4B | $7.6B | $6.1B | $1.5B | $1.1B | $225M | $1.9B | $6.6B | — | $5.9B | -$10.3B | $6.4B | $9.3B | $16.1B | $30.4B | 26.7% | — | 4.9% | — |
| 2019-12-31 | $37.3B | $13.1B | $8.9B | $10.5B | $8.4B | $2.1B | $1.4B | $201M | $1.1B | $6.8B | — | -$4B | -$9B | $9.3B | $6.7B | $11.2B | $31.8B | 27.1% | — | 3.9% | — |
| 2020-12-31 | $33B | $12.7B | $7.7B | $9.8B | $8.7B | $1.2B | $1.5B | $126M | $118M | $7B | — | -$1.5B | -$8.1B | $6.7B | $7.1B | $10.9B | $40.6B | 27.3% | — | 3.7% | — |
| 2021-12-31 | $38.7B | $15.5B | $9.8B | $12.6B | $11.3B | $1.4B | $1.5B | $337M | $111M | $7.3B | — | -$2.8B | -$6.8B | $7.1B | $10B | $12.6B | $39.5B | 26.7% | — | 4.6% | — |
| 2022-12-31 | $43B | $13.8B | $9.5B | $11B | $9.5B | $1.5B | $1.3B | $356M | $1.4B | $7.6B | -$958M | -$763M | -$10.3B | $10B | $9.8B | $11.6B | $36.8B | 25.4% | — | 6.7% | — |
| 2023-12-31 | $45.8B | $15.6B | $10.7B | $11.6B | $9.7B | $1.9B | $1.1B | $254M | $2.3B | $8B | $1.9B | -$3.3B | -$8.3B | $9.8B | $9.7B | $13.7B | $37.5B | 24.7% | — | 6.7% | — |
| 2024-12-31 | $47.1B | $15.8B | $10.6B | $6.8B | $4.7B | $2.1B | $1.1B | $286M | $1.8B | $8.4B | $2.5B | $2.5B | -$6.9B | $9.7B | $11.5B | $14.6B | $45.7B | 21.2% | — | 7.2% | — |
| 2025-12-31 | $47.9B | $18.7B | $13.1B | $7.4B | $5.3B | $2.1B | $1.1B | $279M | $746M | $8.8B | $13M | -$67M | -$8.1B | $11.5B | $11B | $13.9B | $47.2B | 28.7% | — | 5.6% | — |
The Coca-Cola Company (KO) trades at 25.4x forward earnings against a peer median of 20.7x. Its EV/EBITDA of 24.1x compares with a peer median of 15.2x. The comparison uses 4 peers: PepsiCo Inc., The Procter & Gamble Company, Colgate-Palmolive Company and Monster Beverage Corporation, as of 2026-09-08.
Industry capital spending was 4.7% of revenue and 1.59 times depreciation. Company capex also rose through FY2025.5
The constructive cycle is demand-led. Low-single-digit sales growth combined with lower investment intensity would release cash without requiring peak FY2025 profitability to continue.
The adverse cycle begins if the FY2027 pause becomes persistent while pricing or mix weakens. Revenue, operating leverage and cash available after reinvestment would then decline together.
The company spans concentrate and finished-product operations, which may soften regional or format-specific weakness. Both formats must still support consolidated growth for that breadth to create value.6
No new allocation; reduce existing holdings. The report-date price is above Potential value, and the cash and investment checkpoints remain unresolved.3
Do not average down on EPS strength alone. Require better operating cash, lower investment intensity and renewed consolidated growth before reconsidering exposure.
The report-date price exceeds Potential value, while FY2027 revenue is expected to be nearly flat.13
Reduce or exit because weak operating cash and unresolved investment intensity leave little protection against lower value per share.5
The dividend profile does not offset the gap between reported profit and operating cash.5
Sell because the report-date price is above Potential value and the FY2027 revenue outlook offers limited support for the valuation.13
Continued profitability is plausible, but better operating cash and lower investment intensity must be observed before that profitability supports a more constructive view.
Capture your own thesis, position size, and follow-up questions. Stays on this device, only you can see it.
The records this analysis drew on, as they stood when it was run.
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
Pricing, mix or competition compresses profit.
Alert ifAbove 2 times through the 36-month window.
Weaker pricing, mix or competition would push profitability below the normalized path, reducing earnings, cash generation and value per share.
Current:FY2025: 28.71% of revenue.
Alert ifBelow 22.5% within 24 months.
Sustained sales contraction would reduce scale benefits, earnings growth and cash available after investment, weakening value per share.
Current:FY2027 estimate: 0.25%.
Alert ifBelow 0% for two consecutive fiscal years.
A severe relationship loss would directly reduce sales before replacement volume arrives, while adverse repricing would also compress profit margins.
Current:FY2025: relationship represented 10% of revenue.
Alert ifBelow 20% retained within 12 months.
Convert the revenue and margin path into after-tax free cash flow, discount the annual per-share amounts and terminal value at WACC, then adjust for signed net debt per current share.
Limitation: Terminal value is 76.8% of this model's value, above the 60% level at which the methodology flags concentration; the value leans on the years beyond the explicit forecast.
Add depreciation to net income, subtract maintenance capex, divide by diluted shares, and apply a normalized valuation multiple.
Discount the explicit dividend path and its Gordon-growth terminal value at cost of equity.
Limitation: Terminal value is 81.6% of this model's value, above the 60% level at which the methodology flags concentration; the value leans on the years beyond the explicit forecast.
Solve for the growth rate that makes the model value equal the report-date share price.
This path requires better operating cash, resilient margins and improving annual revenue estimates through FY2029. Weak conversion despite EPS growth would disconfirm it.15
Renewed growth would restore scale benefits and cash generation.1
A decline would signal weaker price, mix or competition.
| $49.85B |
| $51.09B |
| $52.37B |
| $53.68B |
| $55.02B |
| Revenue growth | 3.7% | 0.3% | 2.5% | 2.5% | 2.5% | 2.5% |
| Operating margin | 28.1% | 27.4% | 26.8% | 26.1% | 25.5% | 25.5% |
| Operating income | $13.96B | $13.67B | $13.68B | $13.69B | $13.69B | $14.03B |
| Tax rate | 18.0% | 18.0% | 18.0% | 18.0% | 18.0% | 18.0% |
| NOPAT | $11.45B | $11.22B | $11.23B | $11.23B | $11.23B | $11.51B |
| Reinvestment | $842.61M | $595.90M | $366.77M | $806.85M | $1.25B | $1.73B |
| Reinvestment rate (of NOPAT) | 7.4% | 5.3% | 3.3% | 7.2% | 11.1% | 15.0% |
| Depreciation and amortization | $1.09B | $1.09B | $1.12B | $1.15B | $1.18B | $1.21B |
| Free cash flow to firm | $10.61B | $10.62B | $10.86B | $10.43B | $9.99B | $9.78B |
| Terminal growth | 2.5% | 2.5% | 2.5% | 2.5% | 2.5% | 2.5% |
| Diluted shares | 4.30B | 4.29B | 4.27B | 4.26B | 4.25B | 4.24B |
| EPS | $3.33 | $3.53 | $3.63 | $3.74 | $3.85 | $3.95 |
| Net margin | 28.8% | 30.3% | 30.4% | 30.4% | 30.4% | 30.4% |
| Implied net income | $14.34B | $15.12B | $15.52B | $15.92B | $16.34B | $16.75B |
| Margin |
|---|
| KO | The Coca-Cola Company | $378.9B | 25.4x | 7.6x | 24.1x | 42.1% | — |
| PEP | PepsiCo Inc. | 15.3x | 1.9x | 12.2x | 51.5% | 16.8% | |
| PG | The Procter & Gamble Company | 19.8x | 3.9x | 14.8x | 30.3% | 22.1% | |
| CL | Colgate-Palmolive Company | 21.6x | 3.4x | 15.6x | 267.4% | 21.0% | |
| MNST | Monster Beverage Corporation | 33.5x | 9.3x | 28.1x | 25.7% | 29.2% |
| Below 20% within 12 months. |
| Exit because the relationship loss would impair sales before replacement volume is established. |
