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Bull: Accelerated volume growth in emerging markets, successful global scaling of Costa Coffee and RTD alcohol segments, and sustained pricing power drive upper-single-digit EPS growth and consistent margin expansion.
Health Trend Acceleration: Accelerated secular shifts away from carbonated soft drinks permanently compress volume growth.
The Coca-Cola Company is a quintessential mature compounder with unparalleled brand equity, a globally diversified distribution network, and immense pricing power. While secular unit volume growth for carbonated soft drinks is sluggish, consistent pricing execution and strategic portfolio expansion into non-carbonated beverages drive steady, high-margin cash flows.
The Coca-Cola Company is a quintessential mature compounder with unparalleled brand equity, a globally diversified distribution network, and immense pricing power. While secular unit volume growth for carbonated soft drinks is sluggish, consistent pricing execution and strategic portfolio expansion into non-carbonated beverages drive steady, high-margin cash flows.
Late-cycle pricing capture masks volume softness.
A buy for defensive, high-quality cash flow compounding at a compelling valuation discount.
The Coca-Cola Company, a beverage company, manufactures and sells various nonalcoholic beverages in the United States and internationally. The company provides Trademark Coca-Cola, sparkling soft drinks and flavors; water, sports, coffee, and tea; juice, value-added dairy, and plant-based beverages; and emerging beverages. It also offers beverage concentrates and syrups, as well as fountain syrups to fountain retailers comprising restaurants and convenience stores. The company sells its products under the Coca-Cola, Diet Coke/Coca-Cola Light, Coca-Cola Zero Sugar, caffeine free Diet Coke, Cherry Coke, Fanta, Sprite, Simply, Fanta Orange, Fanta Zero Orange, Fanta Zero Sugar, Fanta Apple, Sprite Zero Sugar, Simply Orange, Simply Apple, Simply Grapefruit, Fresca, Schweppes, Thums Up, Aquarius, Ayataka, BODYARMOR, Ciel, Costa, Crystal, Dasani, Fuze Tea, Georgia, glacéau smartwater, glacéau vitaminwater, Gold Peak, I LOHAS, Powerade, Topo Chico, Core Power, Del Valle, fairlife, innocent, Maaza, Minute Maid, Minute Maid Pulpy, Santa Clara, and dogadan brands. It operates through a network of independent bottling partners, distributors, wholesalers, and retailers, as well as through bottling and distribution operators. The Coca-Cola Company was founded in 1886 and is headquartered in Atlanta, Georgia.
Secular volume declines accelerate beyond pricing power elasticity, combined with persistent FX headwinds that permanently compress international returns and the terminal multiple.
Unparalleled brand equity, globally diversified distribution network, immense pricing power.
Economic profit is supported when reported returns exceed the company cost-of-capital hurdle.
Unavailable
FCFF DCF remains positive at the base case: base FCFF $13.4B after capex $2.2B, with terminal value at 76.0% of enterprise value. No FCF cliff is projected unless capex/ or materially resets.
Positive reaction expected if RGM pricing outpaces volume elasticity; negative if volume declines accelerate.
Positive reaction expected if RGM pricing outpaces volume elasticity; negative if volume declines accelerate.
Positive reaction expected if RGM pricing outpaces volume elasticity; negative if volume declines accelerate.
Positive reaction expected if RGM pricing outpaces volume elasticity; negative if volume declines accelerate.
Transformation-build phase requiring targeted reinvestment in non-carbonated segments.
Late-cycle pricing capture masks volume softness.
Input cost inflation pressures gross margins.
Transformation-build phase requiring targeted reinvestment in non-carbonated segments.
Core defensive allocation.
Trim if structural multiple expansion breaches 25x or organic volume irreversibly deteriorates.
Assigning a Buy rating based on a $99.46 fair value midpoint, offering ~27% upside.
Market underestimates terminal cash flow durability and moat length relative to near-term hyper-growth peers.
Assigning a Buy rating based on a $99.46 fair value midpoint, offering ~27% upside.
Reassess the thesis against the named valuation, risk, and quarterly checkpoint evidence in this report.
Capture your own thesis, position size, and follow-up questions. Stays on this device, only you can see it.
Consumer trends shifting away from sugary beverages accelerate faster than portfolio transitions, persistent FX headwinds weigh on global returns, and the stock's valuation premium compresses amid sluggish top-line growth.
Accelerated secular shifts away from carbonated soft drinks permanently compress volume growth.
Strong USD and emerging market volatility structurally erode translated earnings and returns.
Unhedged agricultural and packaging inflation outpaces pricing elasticity, crushing gross margins.
The five developments that would weaken our investment case.
Sustained revenue contraction signifies that consumer migration away from carbonated soft drinks is outpacing pricing actions, breaking the company volume-led organic expansion model.
Current:1.9% for the period ended 2025-12-31.
Alert ifDecelerates below 0.0% over any fiscal year.
Severe gross margin compression shows that concentrate pricing power is failing to offset agricultural ingredient and packaging inflation, squeezing unit profits across global bottling networks.
Current:61.6% for the period ended 2025-12-31.
Alert ifCompresses below 58.0% over any fiscal year.
Operating profitability slipping below this level demonstrates that distribution costs and marketing expenses are growing faster than top-line revenues, eroding structural refranchising margin gains.
Current:31.1% for the period ended 2025-12-31.
Alert ifCompresses below 30.0% over any fiscal year.
Lagging returns on capital indicate that strategic diversification into coffee retail and ready-to-drink alcohol is failing to generate economic value, resulting in misallocated brand investment.
Current:18.0% as of 2026-05-08.
Alert ifFalls below 15.0% over any four-quarter period.
Depressed cash conversion relative to accounting profits restricts free cash flow generation, straining dividend coverage and limiting reinvestment into marketing and high-growth beverage categories.
Current:0.565 as of 2026-05-08.
Alert ifFalls below 0.50 over any four-quarter period.
Each lens answers a different valuation question. Only included lenses set Fair value; floors and diagnostics provide context.
Project SBC-adjusted EPS, discount each year's earnings at cost of equity, then add a Gordon-growth terminal value.
Project EPS through the explicit advantage period, fade growth as competition catches up, and discount the full stream at cost of equity.
Apply a terminal P/E to the dated forward EPS path, then discount that future share value back to the analysis date.
Convert the revenue and margin path into after-tax free cash flow, discount the annual per-share amounts and at , then adjust for signed per current share.
Add depreciation to net income, subtract maintenance capex, divide by diluted shares, and apply a normalized valuation multiple.
Solve for the growth rate that makes the model value equal the report-date share price.
Accelerated volume growth in emerging markets, successful global scaling of Costa Coffee and RTD alcohol segments, and sustained pricing power drive upper-single-digit EPS growth and consistent margin expansion.
Consistent pricing execution and strategic portfolio expansion into non-carbonated beverages drive steady, high-margin cash flows despite sluggish secular unit volume growth for carbonated soft drinks.
Warning level: Decelerates below 0.0% over any fiscal year. Sustained revenue contraction signifies that consumer migration away from carbonated soft drinks is outpacing pricing actions, breaking the company volume-led organic expansion model.
Warning level: Compresses below 58.0% over any fiscal year. Severe gross margin compression shows that concentrate pricing power is failing to offset agricultural ingredient and packaging inflation, squeezing unit profits across global bottling networks.
Warning level: Compresses below 30.0% over any fiscal year. Operating profitability slipping below this level demonstrates that distribution costs and marketing expenses are growing faster than top-line revenues, eroding structural refranchising margin gains.
Warning level: Falls below 15.0% over any four-quarter period. Lagging returns on capital indicate that strategic diversification into coffee retail and ready-to-drink alcohol is failing to generate economic value, resulting in misallocated brand investment.
Warning level: Falls below 0.50 over any four-quarter period. Depressed cash conversion relative to accounting profits restricts free cash flow generation, straining dividend coverage and limiting reinvestment into marketing and high-growth beverage categories.
| $38.66B |
| $43.00B |
| $45.75B |
| $47.06B |
| $47.94B |
| +5.5% |
| Gross profit | $23.30B | $25.00B | $27.23B | $28.74B | $29.54B | +6.1% |
| Operating income | $14.02B | $12.57B | $14.48B | $14.74B | $17.65B | +5.9% |
| Net income | $9.77B | $9.54B | $10.71B | $10.63B | $13.11B | +7.6% |
| EPS (diluted) | — | $2.19 | $2.47 | $2.46 | $3.04 | +11.6% |
| EBITDA | $15.47B | $13.83B | $15.61B | $15.82B | $18.70B | +4.9% |
| R&D | — | — | — | — | — | — |
| SG&A | $12.14B | $12.88B | $13.97B | $14.58B | $14.52B | +4.6% |
Capital allocation should be evaluated against reinvestment needs, balance-sheet strength, and shareholder returns.
| Revenue | 47,941,000,000 |
|---|---|
| Cost of revenue | 18,397,000,000 |
| Gross profit | 29,544,000,000 |
| Operating expenses | 14,633,000,000 |
| Operating income | 14,911,000,000 |
| Non-operating items and tax | -1,804,000,000 |
| Net income | 13,107,000,000 |
Point-in-time financial data used in the 2026-05-08 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 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021-12-31 | 38.7B | 15.5B | 9.8B | 12.6B | 11.3B | 1.4B | 1.5B | 337M | 111M | 7.3B | 228M | — | — | — | — | 9.7B | 42.8B | 28.6% | — | 4.6% | — |
| 2022-12-31 | 43B | 13.8B | 9.5B | 11B | 9.5B | 1.5B | 1.3B | 356M | 1.4B | 7.6B | -958M | — | — | — | — | 9.5B | 39.1B | 28.0% | — | 6.8% | — |
| 2023-12-31 | 45.8B | 15.6B | 10.7B | 11.6B | 9.7B | 1.9B | 1.1B | 254M | 2.3B | 8B | 1.9B | — | — | — | — | 9.4B | 42.1B | 28.6% | — | 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 | — | — | — | — | 10.8B | 44.5B | 29.8% | — | 7.3% | — |
| 2025-12-31 | 47.9B | 18.7B | 13.1B | 7.4B | 5.3B | 2.1B | 1.1B | 279M | 746M | 8.8B | 13M | — | — | — | — | 10.3B | 45.5B | 31.1% | — | 5.6% | — |
KO trades at 22.5x forward earnings against a peer median of 30.1x; EV/EBITDA of 22.2x against a peer median of 25.0x; 6 peers.
| Monster Beverage Corporation |
| 30.1x |
| 9.0x |
| 26.9x |
| 26.8% |
| 31.3% |
| KDP | Keurig Dr Pepper Inc. | 11.3x | 2.3x | 16.9x | 6.3% | 19.0% |
| WMT | Walmart Inc. | 39.9x | 1.5x | 25.0x | 21.8% | 4.6% |
| COST | Costco Wholesale Corporation | 45.0x | 1.6x | 33.2x | 29.7% | 3.7% |
