COCA COLA CO (KO): what the price assumes

In the published model solve dated 2026-Q2, anchored at $89.70, COCA COLA CO (KO) is priced for +13.4% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/KO

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 7.4% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: elevated (limited comparison data)

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.3%); the inversion above states its own rate.

Per-Model Detail (n=17)

Solvency

Bullet Takeaways

• Coca-Cola sells a recipe, not a drink: it ships concentrate to a global web of bottlers who carry the trucks, plants, and people, leaving the parent with the brand and a structurally light asset base that the FY2025 10-K shows still throws off operating income across every region it serves.
• The price already pays for durability, not surprise: at roughly 23 times company-wide operating income it embeds about 6.9% annual operating-profit growth for five years, a pace within recent delivery, so the bet is on how long the run lasts rather than how fast it goes.
• Watch the volume-and-mix print: Q1 2026 (reported April 28) put up 10% organic revenue and 3% unit case volume growth and pushed management to raise full-year guidance, so the next quarter tests whether pricing-led growth keeps converting without volume softening.

Bull Case

Start with the balance sheet, because it explains why this company can be both enormous and capital-light at once. Coca-Cola carries about $11.1 billion in liquid assets against roughly $43.6 billion of gross debt, a net debt position near $32.5 billion that interest coverage of close to nine times comfortably services. That looks like leverage until you see what sits on the other side of the franchise line. The concentrate business does not own most of the bottling plants, trucks, and warehouses that turn syrup into a can on a shelf. The 10-K is explicit that the company supplies "concentrates and syrups to our bottling partners" who then supply finished beverages to customers, and that its Bottling Investments operating segment is only "composed of our consolidated bottling" operations rather than the whole system. The heavy assets live with partners; the parent keeps the formula and the marketing. A modest-looking cash balance funds a business that does not need much cash to run.

That split is the moat, and the segment economics show it. In FY2025 the company reported total net operating revenues of $47,941 million and consolidated operating income of $13,762 million, and the concentrate-led geographic units carry the margin: EMEA produced $4,298 million of operating income on $11,513 million of revenue, and North America produced $5,070 million on $19,586 million. Those are franchise margins, not retail margins. The bottling-heavy revenue runs thin while the concentrate revenue runs fat, which is precisely why the composition descriptor splits the company into concentrate operations and finished-product operations rather than by drink. Capital expenditure tells the same story from the other side: total capex of $1,527 million against nearly $48 billion of revenue is what a recipe business spends, not what a manufacturer spends.

The brand keeps the recipe relevant, which is the part a spreadsheet cannot fully price. The 10-K attributes recent unit case volume to "1% growth in Trademark Coca-Cola and growth in energy drinks" alongside coffee and tea, a portfolio broad enough that a decline in juice or plant-based beverages is offset elsewhere rather than sinking the whole. United States revenue grew to $19,127 million in 2025 from $16,550 million in 2023, and international revenue held near $28.8 billion, so the franchise is compounding on both sides of its largest split. Against the peer cohort of Pepsi, Keurig Dr Pepper, Hershey, Kraft Heinz, and Philip Morris, Coca-Cola is the purest expression of the concentrate model, and the durability the price pays for is the most defensible thing it owns.

Bear Case

The fact a holder would rather not sit with is simple: the static ways of valuing this business say it is expensive, and only the methods that credit future growth reach the price. The price sits more than double where the asset-based and earnings-power methods land, and roughly even with where peer multiples and the growth-oriented cash-flow methods land. Strip out the assumption that today's profitability and growth persist for years, and the support falls away. That is the structure of paying about 23 times company-wide operating income for a business growing operating profit in the high single digits. The price is not betting the company breaks. It is betting the run keeps going long enough to earn a multiple the company's own asset base and current earnings power do not, on their own, justify.

The requirement is concrete. To hold the price, the company has to sustain roughly 6.9% operating-profit growth for about five years, and the harder part is the duration, not the rate, since the near-term pace is within what it has recently delivered. If that growth mean-reverts toward something more like a mature consumer-staples baseline, the multiple compresses toward where the earnings-power methods already sit, which is well below today's price. The lever that does the damage is currency and cost. The 10-K shows Latin America operating income slipped to $3,742 million in 2025 from $3,792 million on "an unfavorable foreign currency exchange rate impact of 21%", a reminder that a dollar of reported growth can be erased by translation before it reaches the holder.

Regulation is the slow-moving second pressure, and it bears directly on the volume the price assumes. The risk section warns of efforts "to reduce consumption or to raise revenue; potential new or increased governmental regulations on particular ingredients or additives in our beverages and packaging", and separately of container-deposit and packaging requirements that "could increase our costs and reduce demand for our products." A sugar tax, an ingredient rule, or a packaging mandate does not have to be dramatic to matter; it has to shave a point or two off the volume-and-mix engine that the five-year growth bet rests on. Net debt near $32.5 billion is serviceable today at almost nine times coverage, but it is leverage that assumes the cash keeps flowing at the current pace. The bear case is not that the formula stops working. It is that the price already pays for it working at full strength for years, and the asset value and current earnings underneath would catch a falling price far lower than where it trades.

Valuation

What the price is paying for here is durability. At today's level the market values the company at roughly 23 times its company-wide operating income, and inverted that implies about 6.9% annual operating-profit growth sustained for around five years. The company earns an operating margin near 29% today, and the price requires it to keep generating profit growth at that high-single-digit pace, so the live question is persistence rather than acceleration. The near-term rate is broadly within what Coca-Cola has recently delivered; the stretch is in how long it must hold, which is the honest center of the bet.

The methods disagree along a clean line. The asset-value lens and the earnings-power lens both read the price as expensive, sitting at roughly half to a bit under half of where they land, while peer multiples and the growth-oriented cash-flow methods land close to the price. That pattern is not a contradiction; it is the signature of a quality franchise whose worth lives in forward cash generation rather than in book value or in a single year's earnings capitalized flat. The static methods structurally cannot frame a brand and a distribution network the way the market does, so they read low. The forward methods reach the price by crediting the growth and the margin holding, which is exactly the assumption the bear questions.

The build of the business sits behind those families. The FY2025 segment note reports North America operating income of $5,070 million on $19,586 million of revenue and EMEA at $4,298 million on $11,513 million, the kind of margin only a concentrate model produces, against total operating income of $13,762 million. Solvency is not the constraint here: net debt near $32.5 billion against interest coverage close to nine times, with a share count essentially flat, means the capital structure carries the bet rather than threatening it. A street mean price target near $86.69 sits above today's price; the gap reflects the street crediting continued mid-single-digit organic growth that the value-oriented methods here do not extend, and the reconciliation is the same durability question the inversion already names.

Catalysts

The most recent print is the cleanest catalyst, and it cut in the bull's favor. On April 28, 2026 Coca-Cola reported first-quarter net revenue of $12.47 billion, up about 12% year over year, with organic revenue up 10% and unit case volume up 3% globally, led by a double-digit volume gain in Coca-Cola Zero Sugar. The result was strong enough that management raised full-year 2026 guidance to organic revenue growth of 4% to 5% and comparable EPS growth of 8% to 9%. Pricing-led growth converting into a volume gain rather than a volume sacrifice is the pattern the five-year durability bet needs, and this quarter delivered it.

The forward watch items are cost and currency, both of which management flagged. On the Q1 call, leadership framed commodity pressure in tea and coffee as manageable while noting that geopolitical tensions could shift that cost outlook unexpectedly. Currency is the recurring swing factor the segment results already show, and a sharp move can erase reported growth before it reaches the holder. The next quarterly print is the test of whether the raised guidance holds as the year progresses.

Sell-side positioning is constructive. The consensus rating sits at Buy with a mean price target near $86.69, above the current price, and no analysts carrying a sell view as of late June 2026. That optimism is itself a risk variable: a single soft volume quarter against raised guidance would land harder precisely because expectations have been reset upward.

Peer Cohorts (Per Segment, With Filing Citations)

Bottling Investments (reported)

• CCEP (COCA-COLA EUROPACIFIC PARTNERS PLC)
• FY2025 20-F: …100 % (A) Marten Meesweg 25 J, 3068 AV, Rotterdam, Netherlands BNII Inc. Philippines 100 % 26/F Uptown Eastgate, 11th Avenue corner 36th Street, Bonifacio Global City, Taguig, Philippines BNI (Finance) B.V. Netherlands 100 % Marten Meesweg 25 J, 3068 AV, Rotterdam, Netherlands Bottling Great Britain Limited United…
• FY2025 20-F: …local-heritage/ Modernising Grigny Bottles collected Smart coolers €146m 39m 201 invested in storage capacity, optimising manufacturing processes, modernising infrastructure and carbon reduction bottles collected by CCEP Papua New Guinea through its PET plastic bottle collection programme new AI-powered smart coolers…
• COKE (COCA-COLA CONSOLIDATED, INC.)
• FY2025 10-K: …we believe has enabled, and will continue to enable, us to better serve our customers. This platform creates a more seamless order and payment platform for certain customers and we expect this platform will continue to enable us to enhance customer service and create more selling opportunities for our teammates. This…
• FY2025 10-K: …of the fiscal year, as sales of our products are typically correlated with warmer weather. We believe that we and other manufacturers from whom we purchase finished products have adequate production capacity to meet sales demand for sparkling and still beverages during these peak periods. See "Item 2. Properties" for…
• ABEV (AMBEV S.A.)
• FY2025 20-F: …of a new glass manufacturing facility in the State of Paraná, Brazil. In 2024, consolidated capital expenditures on property, plant and equipment and intangible assets totaled R$4,749.1 million, consisting of R$2,838.0 million for our Brazil business segment, R$558.8 million for our CAC business segment, R$982.8…
• FY2025 20-F: …affect our business, financial condition, and competitive position. If any of our products is defective or found to contain contaminants, we may be subject to product recalls, individual or collective litigation and/or other liabilities. We take precautions to ensure that our beverage products and our associated…

Core business (reported)

• PEP (PepsiCo, Inc.)
• FY2025 10-K: …physical and digital operations among retailers, as well as the international expansion of hard discounters, and the current economic environment continue to increase the importance of major customers. In 2025, sales to Walmart Inc. (Walmart) and its affiliates, including Sam's Club (Sam's), represented approximately…
• FY2025 10-K: …the effective net pricing, productivity savings, and lower advertising and marketing expenses. IB Franchise Net revenue increased 2%, primarily reflecting effective net pricing. Unit volume grew 1.5%, primarily reflecting growth in the Middle East, China and Pakistan. Operating profit increased 21%, primarily…
• KDP (Keurig Dr Pepper Inc.)
• FY2025 10-K: Financial Statements for additional information on the JDE Peet's Acquisition and related transactions. On August 25, 2025, we announced our intention to separate our beverage and coffee portfolios into two independent, publicly traded companies, which will allow for more tailored growth strategies, operating models,…
• FY2025 10-K: …their route-to-market, reducing prices, or increasing promotional activities. We also compete with various smaller or regional companies and private label manufacturers, which may be more innovative, better able to bring new products to market, and better able to quickly serve niche markets. Additionally, we compete…
• BUD (Anheuser-Busch InBev SA/NV)
• FY2025 20-F: Table of Contents For a discussion of changes in revenue, see "Item 5. Operating and Financial Review-E. Results of Operations-Year Ended 31 December 2025 Compared to the Year Ended 31 December 2024-Revenue" of this Form 20-F and "Item 5. Operating and Financial Review-E. Results of Operations-Year Ended 31 December…
• FY2025 20-F: …we are well-placed to address changing consumer needs in the various categories (above core, core and value) within any given market. 4. COMPETITION We believe our largest competitors are Heineken, China Resources, and Carlsberg based on information from IWSR as of January 2026. Historically, brewing was a local…
• STZ (CONSTELLATION BRANDS, INC.)
• FY2025 10-K: …Officer. The business segments reflect how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management, and the structure of our internal financial reporting. Long-lived tangible assets and total asset information by segment is not provided to, or reviewed by,…
• FY2025 10-K: …We perform ongoing credit evaluations of our customers' financial position, and management is of the opinion that any risk of significant loss is reduced due to the diversity of our customers and geographic sales area. 22. BUSINESS SEGMENT INFORMATION Our internal management financial reporting consists of two…
• DEO (DIAGEO plc)
• FY2025 20-F: …organisation. We expect to deliver approximately c.$625 million in cost savings over the next three years through efficiencies in A&P, overheads, supply chain, and trade investment. Around c.50% of these savings are expected to contribute to operating profit, with the remaining c.50% reinvested in growth areas such…
• FY2025 20-F: …of (1.1)%, partially offset by hyperinflation adjustments and organic net sales growth. Organic net sales growth of 1.7% was driven by organic volume growth of 0.9% and positive price/mix of 0.8%. Excluding the impact of the Cîroc transaction, organic net sales growth was 1.5%, with 0.8% volume growth and 0.7%…
• MNST (Monster Beverage Corp)
• FY2025 10-K: …Bull GmbH, KDP, Molson Coors, Constellation Brands, AB InBev, The Boston Beer Company and The Mark Anthony Group. We also compete with companies that are smaller or primarily national or local in operations, such as CELSIUS, PRIME, C4, Alani Nu, GHOST, ZOA, GORGIE, and others as well as local craft breweries in our…
• FY2025 10-K: …Strategic Brands segment primarily generates net operating revenues by selling "concentrates" and/or "beverage bases" to authorized bottling and canning operations. Such bottlers generally combine the concentrates and/or beverage bases with sweeteners, water and other ingredients to produce ready-to-drink packaged…
• CCEP (COCA-COLA EUROPACIFIC PARTNERS PLC)
• FY2025 20-F: …volume, comparable and FX neutral revenue and revenue per unit case, comparable and FX neutral operating profit, comparable diluted EPS, comparable free cash flow, ROIC and comparable ROIC are non-IFRS performance measures. Non-IFRS adjusted comparable financial information as if the acquisition of Coca-Cola…
• FY2025 20-F: Our performance indicators Reported revenue ♦ Reported operating profit Reported diluted earnings per share (EPS) Net cash flows from operating activities Return on invested capital (ROIC) €20.9bn €2.8bn €4.26 €3.0bn 10.9% Comparable and FX neutral revenue Comparable and FX neutral operating profit Comparable diluted…
• MDLZ (Mondelez International, Inc.)
• FY2025 10-K: …and powdered beverages around the world. We aim to be the global leader in snacking. Our strategy is to drive long-term growth by focusing on four strategic priorities: accelerating consumer-centric growth, driving operational excellence, creating a winning growth culture and scaling sustainable snacking. We believe…
• FY2025 10-K: …units while empowering our local and commercial operations to respond faster to changing consumer preferences and capitalize on growth opportunities. We believe our efforts to continue advancing a winning growth culture will help drive profitable top-line growth. 3 Table of Contents • Scale sustainable snacking . We…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.