COCA COLA CO (KO): what the price requires
At today's price, COCA COLA CO (KO) is priced for +8.3% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-13 · Source: https://boothcheck.com/report/KO
Headline
| Field | Value |
|---|---|
| Ticker | KO |
| Company | COCA COLA CO |
| Current price | $84.30/sh |
| Composition | Concentrate operations 59% / Finished product operations 41% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 24.5% |
| Operating margin today | 33.5% |
| Margin compression implied | -9.0pp |
| Implied growth | 8.3% |
| Multiple paid | 24x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 7.4% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8.2pp.
Reconcile: at the x-ray's 9.3% required return this reads ~22.2%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.47σ |
| cohort percentile (of 69 peers) | 70 |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
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.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.46x | 5 | expensive |
| Earnings | 2.47x | 4 | expensive |
| Relative | 1.24x | 5 | expensive |
| Growth | 1.21x | 4 | expensive |
Families that justify the price: Relative, Growth 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=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $62.45 | 1.35x | yes | FCF base $13.2B, growth 5% (input: historical growth), terminal g 4.0%, WACC 9.2%, 6yr projection |
| DCF Exit Multiple | Growth | $77.79 | 1.08x | yes | Exit EV/EBITDA: 20.7x / 22.7x / 24.7x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $67.87 | 1.24x | yes | P/E 22x (sector median), scenarios: 18.4x / 22.0x / 25.6x (bear / base = sector held flat / bull), EV/EBITDA 16.62x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $75.00 | 1.12x | yes | Stage 1: 20% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $34.33 | 2.46x | yes | BV/sh $7.80, ROE (TTM) 40.7%, ke 9.3% |
| Two-Stage Excess Return | Asset | $80.61 | 1.05x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $64.78 | 1.30x | yes | Rev $49.3B, growth 5% (input: historical growth; tapered), Terminal P/S: 6.2x / 7.4x / 8.6x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $88.74 | 0.95x | yes | EPS $3.18, growth 28% (input: historical EPS growth), PEG=0.95 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $27.58 | 3.06x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $11.63B × (1−14%) / WACC 9.2% → EPV (no growth) |
| Residual Income | Asset | $54.47 | 1.55x | yes | BV $7.80 + 5yr PV of (ROE (TTM) 40.7% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $23.62 | 3.57x | yes | √(22.5 × EPS $3.18 × BVPS $7.80) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $52.84 | 1.60x | yes | EBITDA $15.51B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $33.99 | 2.48x | yes | FCF $12562.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $102.61 | 0.82x | yes | EPS $3.18 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $13.86 | 6.08x | yes | BV $7.80 × (ROIC 16.4% / WACC 9.2%) |
| P/Sales Sector | Relative | $22.85 | 3.69x | yes | Revenue $49.28B × sector P/S 2.0x |
| PEG Fair Value | Relative | $119.25 | 0.71x | yes | EPS $3.18 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $34.38 | 2.45x | yes | EPS $3.18 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $32.5b |
| Net debt / NOPAT (after-tax) | 2.32x |
| Net debt / operating income (pre-tax) | 1.99x |
| Interest coverage | 10.2x |
| Share count CAGR (buyback) | -0.2% |
| Burning cash | no |
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)
- (no filing in the citation store)
- COKE (COCA-COLA CONSOLIDATED, INC.)
- (no filing in the citation store)
- ABEV (AMBEV S.A.)
- (no filing in the citation store)
Core business (reported)
- PEP (PepsiCo, Inc.)
- (no filing in the citation store)
- KDP (Keurig Dr Pepper Inc.)
- (no filing in the citation store)
- BUD (Anheuser-Busch InBev SA/NV)
- (no filing in the citation store)
- STZ (CONSTELLATION BRANDS, INC.)
- (no filing in the citation store)
- DEO (DIAGEO plc)
- (no filing in the citation store)
- MNST (Monster Beverage Corp)
- (no filing in the citation store)
- CCEP (COCA-COLA EUROPACIFIC PARTNERS PLC)
- (no filing in the citation store)
- MDLZ (Mondelez International, Inc.)
- (no filing in the citation store)
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.
Sources
Coca-Cola Q1 2026 earnings release, April 28, 2026 · MarketBeat analyst consensus, June 2026 · Coca-Cola Q1 2026 earnings release and earnings call, April 28, 2026 · Coca-Cola Q1 2026 guidance update, April 28, 2026 · Coca-Cola Q1 2026 earnings call, April 28, 2026