The Coca-Cola Company
KO
$93.90
+2.07%
The Coca-Cola Company is the world's largest non-alcoholic beverage enterprise, marketing 200 brands across carbonated soft drinks, water, sports drinks, energy, juice, and coffee through a global network of bottlers and distribution partners in more than 200 countries, with roughly 60% of revenue generated outside the United States. Its competitive identity rests on an unrivaled brand portfolio, an asset-light concentrate model that outsources capital-intensive bottling, and pricing power that has proven durable across economic cycles — a classic wide-moat consumer staple franchise. The current investor narrative centers on accelerating organic revenue growth (Q2 2026 revenue rose 6.74% year over year to $13.38 billion) driven by price/mix rather than volume, alongside a sharp margin recovery as operating margins climbed back toward the mid-30s after a soft FY2025 fourth quarter. Commentary has also framed KO as a defensive beneficiary as the "Magnificent Seven" trade fractures and capital rotates into consumer staples, while the stock's 38.9% one-year gain has shifted the debate from value opportunity to whether the re-rating has run ahead of fundamentals.…
KO
The Coca-Cola Company
$93.90
Related headlines
Investment Opinion: Should I buy KO Today?
The synthesized rating is Hold. Coca-Cola is a high-quality wide-moat franchise with improving fundamentals, but at $93.90 the stock has already captured the available upside: the 23-analyst consensus is "buy" (mean 1.75) yet the $94.74 average target implies only +0.9%, and the stock sits at 99.8% of its 52-week range. The core thesis is that you own KO for durable cash flow and a 2.92% dividend, not for near-term capital appreciation.
The supporting evidence is strong on quality: Q2 2026 revenue grew 6.74% YoY to $13.38 billion, operating margin recovered to 34.92% from 15.57% in Q4 2025, TTM free cash flow of $14.297 billion covers the dividend at a 66.98% payout ratio, and ROE of 40.74% reflects the capital-light concentrate model. Valuation is the constraint — 22.92x trailing and 26.64x forward earnings, 18.06x EV/EBITDA, and 6.27x sales are premium multiples for 6.7% growth, with a PEG of 0.976 offering fair rather than compelling value.
The biggest risks that could invalidate the thesis are a volume-led revenue deceleration, emerging-market currency and elasticity pressure on the ~60% international revenue base, and multiple compression if staples rotation reverses. This Hold would upgrade to Buy on a pullback toward the $85–86 consolidation zone (roughly 20x forward EPS) or on evidence that organic growth accelerates above 8% with volume turning positive; it would downgrade to Sell if revenue growth decelerates below 4% or operating margins fall back below 30%. Verdict: fairly valued relative to its own history and at a quality premium to peers — not overvalued, but no longer undervalued.
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KO 12-Month Price Forecast
Coca-Cola is a fundamentally sound franchise whose operating momentum — 6.74% revenue growth, 34.92% Q2 operating margin, $14.3 billion TTM free cash flow — is real and improving, but the stock's 38.93% one-year gain has pulled the price to the consensus target and to 99.8% of its 52-week range. The unusual forward-over-trailing PE inversion (26.64x vs. 22.92x) signals the market is pricing in EPS normalization rather than growth, capping multiple expansion. With a beta of 0.318, KO offers downside protection but limited torque, and the 2.92% yield is the primary near-term return driver. I would upgrade to bullish on a pullback to the $85–86 support zone or on evidence of positive volume alongside pricing, and downgrade to bearish if organic growth falls below 4% or margins slip back under 30%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on The Coca-Cola Company's 12-month outlook, with a consensus price target around $94.74 and implied upside of +0.9% versus the current price.
Average Target
$94.74
0 analysts
Implied Upside
+0.9%
vs. current price
Analyst Count
—
covering this stock
Price Range
$75 - $104
Analyst target range
Coverage is deep and overwhelmingly constructive: 23 analysts follow KO with a consensus recommendation of "buy" (mean rating 1.75 on a 1-to-5 scale where 1 is strong buy), and the average target price of $94.74 implies just +0.9% upside from the current $93.90 — essentially fair value. The consensus leans bullish on fundamentals but neutral on near-term price, a classic setup where the stock has caught up to its price targets after a 38.9% run; the recent institutional actions reinforce this, with JP Morgan, Barclays, RBC, Piper Sandler, Jefferies, Wells Fargo, and TD Cowen all reiterating Overweight/Buy/Outperform ratings in late July and September 2026 without visible downgrades.\n\nThe target range of $75.00 to $104.00 is wide — a 39% spread from low to high — signaling meaningful dispersion in assumptions. The $104 high target implies roughly 10.8% upside and likely assumes continued price/mix-led revenue growth, margin expansion toward the high-30s operating level, and multiple expansion as defensive flows persist. The $75 low target, roughly 20% below the current price, prices in margin compression from consumer elasticity, currency headwinds in emerging markets, or a rotation out of staples back into growth. With consensus EPS of $4.33 against the current $93.90 price (21.7x forward earnings), the average target embeds only modest multiple expansion; the tight clustering of reiterations suggests strong conviction in the franchise but limited conviction in further near-term upside, making the stock a hold-for-yield rather than a fresh-buy at current levels.
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Bulls vs Bears: KO Investment Factors
The bull case rests on genuine fundamental improvement — 6.74% revenue growth, a 34.92% Q2 operating margin, $14.3 billion of TTM free cash flow, and 40.7% ROE — reinforced by a defensive rotation that has driven 23.4 points of relative strength versus the S&P 500 over one year. The bear case is almost entirely about price: at $93.90 the stock trades at 99.8% of its 52-week range, the average analyst target of $94.74 offers just 0.9% upside, and the forward PE of 26.64x exceeds the trailing 22.92x. On balance the bear evidence on valuation is currently stronger than the bull evidence on incremental upside — the fundamentals justify owning the stock, but not chasing it at an all-time high. The single most important tension is whether price/mix-led growth can keep compounding fast enough to grow into a 26.6x forward multiple; if volume turns negative or elasticity bites in emerging markets, the re-rating unwinds, but if pricing holds through 2027 the premium is defensible.
Bullish
- Price/mix-led revenue acceleration: Q2 2026 revenue rose 6.74% YoY to $13.38 billion from $12.535 billion, and the sequential climb from $11.822 billion in Q4 2025 shows acceleration through H1 2026. Growth is driven by pricing and mix rather than volume, demonstrating that KO's brand equity still supports price increases without demand destruction.
- Margin recovery is sharp and broad: Operating margin rebounded to 34.92% in Q2 2026 from just 15.57% in Q4 2025, with gross margin stable at 62.89% versus 60.05% in the depressed quarter. The Q4 weakness was largely one-off (other expenses of $1.059 billion), so the underlying earnings engine is stronger than the 28.71% TTM operating margin suggests.
- Cash generation comfortably funds dividend: TTM free cash flow of $14.297 billion — including $5.104 billion in Q2 2026 alone on just $418 million of capex — covers the $2.281 billion quarterly dividend with room to spare. The 66.98% payout ratio and 2.92% yield make the dividend well-secured rather than stretched.
- Elite returns on capital: ROE of 40.74% and ROA of 9.40% reflect the asset-light concentrate model that outsources bottling capex. Interest coverage of roughly 12.7x on Q2 figures ($4.672 billion operating income vs. $369 million interest expense) shows the 1.468 debt-to-equity load is manageable.
Bearish
- Analyst targets imply zero upside: The $94.74 average target sits just 0.9% above the $93.90 price, and the stock trades at 99.8% of its 52-week range ($67.27–$94.10). After a 35.85% YTD run, the consensus has effectively caught up to the price, leaving no margin of safety in published targets.
- Forward PE exceeds trailing PE: The stock trades at 26.64x forward earnings versus 22.92x trailing — an inversion implying the market expects EPS to fall from the current run-rate. With consensus FY2026 EPS of $4.33 against a $4.12 annualized Q2 figure, delivery must be near-perfect to justify the multiple.
- Rich absolute multiples for 6.7% growth: EV/EBITDA of 18.06x, EV/Sales of 8.50x, PS of 6.27x, and P/B of 9.35x are premium for a beverage company growing revenue 6.74%. The PEG of 0.976 is fair, not cheap, and caps multiple expansion from here.
- Leverage and rate sensitivity: Debt-to-equity of 1.468 and a current ratio of 1.459 leave limited balance-sheet cushion if refinancing costs rise. Roughly 60% of revenue is international, exposing earnings to emerging-market currency and consumer trade-down risk if elasticity tightens.
KO Technical Analysis
Coca-Cola is in a sustained, powerful uptrend, with the shares up 38.93% over the past year versus just 15.53% for the S&P 500 — a relative strength advantage of 23.40 percentage points. At $93.90, the stock sits at 99.8% of its 52-week range (low $67.27, high $94.10), essentially pressing against all-time-high territory; this positioning signals strong momentum but also raises the risk of overextension, particularly after a 35.85% year-to-date advance that dwarfs the index's 11.93% gain. The maximum drawdown of only -8.5% over the period underscores how orderly the climb has been, with shallow pullbacks consistently bought.\n\nShort-term momentum is accelerating rather than fading: the stock gained 6.86% in the last month and 15.13% over three months, both well ahead of SPY's 1.22% and 2.69% respectively, producing relative strength readings of +5.64 and +12.44. The most recent session added 2.07% on elevated volume of 23.1 million shares, confirming the breakout with participation. Notably, the 1-month gain (+6.86%) exceeds the 3-month pace on an annualized basis, indicating the trend is steepening into the print rather than mean-reverting — a pattern consistent with institutional accumulation ahead of earnings. There is no RSI data provided, but the unbroken series of higher lows since the April 2026 base near $74.63 argues against any divergence.\n\nKey resistance sits at the 52-week high of $94.10, just 0.2% above the current $93.90 — a clean break would confirm a new leg higher and likely trigger momentum-chasing flows. Support is anchored at the 52-week low of $67.27, with intermediate support around the $85–86 zone where the stock consolidated in September. The beta of 0.318 is the critical risk-management input: KO moves roughly one-third as much as the market, making it a low-volatility defensive holding that requires larger position sizing to achieve equivalent portfolio risk contribution, but also one that historically holds up poorly as a momentum vehicle if the staple rotation reverses.
Beta
0.32
0.32x market volatility
Max Drawdown
-8.5%
Largest decline past year
52-Week Range
$67-$94
Price range past year
Annual Return
+38.9%
Cumulative gain past year
| Period | KO Return | S&P 500 |
|---|---|---|
| 1m | +6.9% | +0.2% |
| 3m | +15.1% | +2.9% |
| 6m | +24.0% | +8.4% |
| 1y | +38.9% | +14.9% |
| ytd | +35.9% | +11.9% |
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KO Fundamental Analysis
Revenue is growing at a healthy clip for a mature staple: Q2 2026 revenue of $13.38 billion rose 6.74% year over year from $12.535 billion in Q2 2025, and the trailing four-quarter run-rate of roughly $50.1 billion (Q3 2025 $12.455B + Q4 2025 $11.822B + Q1 2026 $12.472B + Q2 2026 $13.38B) is tracking toward consensus FY2026 revenue of $56.94 billion. The sequential progression from $11.822 billion in Q4 2025 to $13.38 billion in Q2 2026 shows clear acceleration through the first half, with the Pacific segment contributing $12.07 billion and bottling investments $1.53 billion. Growth is being driven by price/mix and international markets rather than volume, which supports the investment case as long as elasticity remains contained — the key risk being consumer trade-down in emerging markets.\n\nProfitability is robust and improving: Q2 2026 net income reached $4.425 billion on a 33.07% net margin, with gross margin of 62.89% and operating margin of 34.92%, up sharply from the depressed Q4 2025 quarter when net income fell to $2.271 billion (19.21% margin) and operating margin compressed to 15.57%. Gross margin has been stable in the 62–63% band across Q1 and Q2 2026 versus 60.05% in Q4 2025, while the trailing net margin of 27.34% and operating margin of 28.71% reflect the full-year blend. The Q4 2025 weakness appears to have been a combination of seasonality and one-off charges (other expenses of $1.059 billion), and the rebound to 34.9% operating margin in Q2 2026 suggests the underlying earnings engine is intact and arguably stronger than the headline TTM figures imply.\n\nThe balance sheet carries meaningful but manageable leverage: debt-to-equity of 1.468 and a current ratio of 1.459 provide adequate liquidity, while return on equity of 40.74% and return on assets of 9.40% reflect the high-margin, capital-light concentrate model. Free cash flow is substantial — $14.297 billion on a trailing basis, with Q2 2026 alone generating $5.104 billion of FCF on $5.522 billion of operating cash flow against just $418 million of capex — comfortably covering the $2.281 billion quarterly dividend (payout ratio 66.98%, yield 2.92%). The FCF yield of roughly 4.75% on the $300.8 billion market cap is modest for a staple but is supported by the 2.9% dividend; the main financial risk is the $1.47 debt-to-equity load in a higher-rate environment, though interest coverage remains comfortable at roughly 12.7x on the Q2 figures.
Quarterly Revenue
$13.4B
2026-07
Revenue YoY Growth
+6.7%
YoY Comparison
Gross Margin
62.9%
Latest Quarter
Free Cash Flow
$14.3B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is KO Overvalued?
Because Coca-Cola is solidly profitable (Q2 2026 net income of $4.425 billion), the PE ratio is the appropriate primary metric. The stock trades at 22.92x trailing earnings but 26.64x forward earnings — an unusual inversion where the forward multiple exceeds the trailing multiple, implying the market expects EPS to decline from the current run-rate (TTM EPS of roughly $4.10 versus consensus FY2026 EPS of $4.33, though the reported quarterly EPS of $1.03 annualizes to $4.12). The PEG ratio of 0.976 is the more telling figure: it prices roughly one unit of PE per unit of growth, which is reasonable for a staple but leaves little room for disappointment given the 38.9% one-year re-rating.\n\nAgainst the broader consumer staples sector, KO's 22.92x trailing PE and 6.27x PS sit at a premium to the typical staple multiple in the high-teens, reflecting its superior 27.3% net margin and 61.6% gross margin versus sector norms in the low-to-mid 50s. The EV/EBITDA of 18.06x and EV/Sales of 8.50x are rich for a beverage company growing revenue at 6.7%, and the 9.35x price-to-book is elevated, though justified by the 40.7% ROE. The premium is defensible on quality and brand moat but not on growth — investors are paying for stability and pricing power, not acceleration, which caps multiple expansion from here.\n\nHistorically, KO's PE has ranged from roughly 19x to 33x over the past several years, with the current 22.92x sitting in the lower-middle of that band — notably below the 32.98x recorded at Q4 2025 and the 30.52x at Q4 2024, when earnings were depressed. On price-to-sales, however, the current 6.27x compares to historical quarterly readings that ranged from about 20x to 27x on the old share-count basis, so the current figure is not directly comparable; the more relevant signal is that the stock's re-rating has been driven by price appreciation rather than multiple expansion in PE terms, since earnings have grown alongside the share price. That is a healthier setup than a pure multiple-driven rally, though it means the stock now needs continued earnings delivery to hold its gains.
PE
22.9x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 19x~37x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
18.1x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks center on leverage and earnings quality. Debt-to-equity of 1.468 and a current ratio of 1.459 leave modest cushion, and interest expense of $369 million in Q2 2026 consumes roughly 7.9% of operating income. The Q4 2025 quarter demonstrated earnings volatility — net income fell to $2.271 billion (19.21% margin) with operating margin at 15.57% on $1.059 billion of other expenses — showing that one-off charges can cut quarterly profitability nearly in half. Revenue is also concentrated in carbonated soft drinks and in international markets (~60% of sales), so a consumer trade-down in Latin America or Asia-Pacific would hit both volume and mix simultaneously.
Market and competitive risks are dominated by valuation compression. At 26.64x forward earnings, 18.06x EV/EBITDA, and 8.50x EV/Sales for a business growing 6.74%, KO trades at a premium to the high-teens trailing multiple typical of consumer staples; any rotation back into growth stocks — the inverse of the reported Magnificent Seven fracture — would compress that premium. Competition from faster-growing beverage names is real: Monster Beverage's international sales are surging 34.6% and now represent 46% of its revenue, illustrating share gains in energy where KO is a challenger rather than the incumbent. The beta of 0.318 cushions market-wide selloffs but also means KO will lag badly if staples fall out of favor, and a stronger dollar would translate ~60% overseas revenue into fewer dollars.
In a worst-case scenario, a volume-led revenue miss combines with emerging-market currency headwinds and a rotation out of staples, compressing the multiple toward the sector norm while earnings estimates reset lower. The analyst low target of $75.00 implies roughly -20% from $93.90, and the 52-week low of $67.27 implies about -28%. A realistic adverse path — a Q3 miss plus a de-rating to ~20x forward EPS of $4.33 — would put the stock near $87 (-7%), while a full bear case toward $75 would cost an investor roughly 20% from current levels, with the dividend yield of 2.92% only partially offsetting the drawdown.
FAQ
The most severe risk is valuation compression: at 26.64x forward earnings with only 0.9% upside to the $94.74 average target, any rotation back into growth stocks could de-rate the shares toward the $75 analyst low, a roughly 20% decline. Second is earnings volatility and leverage — Q4 2025 net income fell to $2.271 billion (19.21% margin) on $1.059 billion of one-off charges, and debt-to-equity of 1.468 leaves limited cushion if rates stay elevated. Third is international exposure: roughly 60% of revenue comes from outside the U.S., so a stronger dollar or emerging-market consumer trade-down would hit both volume and price/mix. Fourth, competitive pressure in faster-growing categories is real, with Monster Beverage's international sales up 34.6% and now 46% of its revenue.
The 12-month outlook assigns a 55% probability to a base case of $90–$97, tracking the $94.74 analyst average target as earnings grow into the valuation with FY2026 EPS of $4.33 and revenue near the $56.94 billion consensus. The bull case (20% probability, $100–$104) requires margin expansion toward the high-30s and continued staples rotation to reach the $104 analyst high. The bear case (25% probability, $75–$85) assumes a volume-led miss, currency headwinds, and multiple compression toward the $75 low target. The base case is most likely because price/mix growth of 6–7% and stable ~35% operating margins support the current multiple without requiring expansion.
KO is fairly valued to modestly expensive. The trailing PE of 22.92x sits in the lower-middle of its historical 19x–33x range, but the forward PE of 26.64x exceeds the trailing multiple — an inversion implying expected EPS decline — and EV/EBITDA of 18.06x, EV/Sales of 8.50x, and P/B of 9.35x are premium for a company growing revenue 6.74%. The PEG of 0.976 prices roughly one unit of PE per unit of growth, which is fair rather than cheap. Relative to consumer staples trading in the high-teens, KO commands a quality premium justified by its 27.3% net margin and 40.7% ROE, but the market is paying for stability and pricing power, not acceleration, which limits further multiple expansion.
From a risk/reward perspective, KO is a reasonable hold but a mediocre fresh buy at $93.90. The 23-analyst consensus is "buy" with a mean rating of 1.75, yet the $94.74 average target implies only 0.9% upside, and the stock trades at 99.8% of its 52-week range. The downside is anchored by the $75 analyst low target (roughly -20%) and the $67.27 52-week low (about -28%), so the asymmetry is unfavorable at current levels. It is a good buy for income-focused investors willing to accept a 2.92% yield and low beta of 0.318 in exchange for stability, and a better buy on a pullback toward the $85–86 support zone where the forward multiple would compress toward 20x.
KO is best suited to long-term holding. Its beta of 0.318 and maximum drawdown of just -8.5% over the past year make it a low-volatility stabilizer rather than a trading vehicle, and the 2.92% dividend with a 66.98% payout ratio rewards patience with compounding income. The 38.93% one-year gain and 35.85% YTD advance mean short-term momentum is extended at 99.8% of the 52-week range, so near-term entry carries reversion risk. Earnings visibility is high given the staple demand profile and 200-brand portfolio, supporting a minimum holding period of three to five years to capture dividend growth and the full pricing cycle. Short-term traders should wait for a confirmed break above $94.10 or a pullback to the $85–86 support zone.