KO
KO
The Coca-Cola Company (NYSE: KO) is the world's largest non-alcoholic beverage company, with a portfolio of over 200 brands sold in virtually every country. Founded in 1886 and headquartered in Atlanta, Georgia, KO operates through a franchise model — it produces concentrate and syrups, which are then sold to bottling partners who manufacture, package, and distribute the finished products. This asset-light model generates exceptionally high margins (gross margin ~62%, operating margin ~29%) and robust free cash flow.
Key competitive advantages include: (1) the world's most recognized brand, (2) an unparalleled global distribution network spanning 200+ countries, (3) a franchise/bottling model that shifts capital intensity to partners, and (4) a 64-year consecutive dividend growth streak — one of the longest in corporate history. The company has been re-accelerating organic revenue growth through pricing power (~5-6% price/mix) and category expansion beyond carbonated soft drinks into water, sports drinks, coffee (Costa), and emerging categories.
Warren Buffett's Berkshire Hathaway remains KO's largest shareholder (~9.2% of shares), a powerful endorsement of the company's durable competitive moat. The 2025 fiscal year saw a major earnings inflection: EPS jumped 23.6% to $3.04, driven by strong pricing, operational leverage, and a recovery from the 2024 one-time charges that had depressed results.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Sparkling Soft Drinks | $19,176M | 40% | +3.0% | 32.0% | Coca-Cola, Diet Coke, Sprite — mature but stable cash engine |
| Water, Sports & Coffee | $9,588M | 20% | +6.0% | 25.0% | Dasani, Smartwater, Powerade, Costa — fastest growing |
| Juice, Dairy & Plant | $5,749M | 12% | +2.0% | 18.0% | Minute Maid, fairlife — category headwinds |
| Emerging & Other | $4,824M | 10% | +8.0% | 22.0% | Alcohol partnerships, emerging market expansion |
| Global Ventures | $8,604M | 18% | +4.0% | 28.0% | Costa, Innocent, acquisitions pipeline |
| Blended Growth Rate | — | 100% | +4.2% | — | Weighted avg across segments |
Startup
Hyper Growth
Self Funding
Operating Leverage
Capital Return
Decline
Stage 5 — Capital Return: Mature business returning capital via dividends and buybacks. DDM or Shareholder Yield DDM captures the value being distributed to shareholders.
Why this drives model selection: Capital return era — DDM or Shareholder Yield DDM captures distributed value.
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 24.0% | ≥12% strong |
| FCF Margin | 11.0% | ≥10% strong |
| Debt / EBITDA | 3.1x | 2–4x moderate |
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | Stable (±1pp) | Directional margin trajectory |
| Analyst Revisions | Upward revisions | Last 90 days consensus direction |
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $38,655 | $43,004 | $45,754 | $47,061 | $47,941 |
| Rev YoY Growth | — | +11.3% | +6.4% | +2.9% | +1.9% |
| Gross Margin | 60.3% | 58.1% | 59.5% | 61.1% | 61.6% |
| EBITDA ($M) | $11,760 | $12,169 | $12,439 | $11,067 | $14,812 |
| EBITDA Margin | 30.4% | 28.3% | 27.2% | 23.5% | 30.9% |
| Operating Income ($M) | $10,308 | $10,909 | $11,311 | $9,992 | $13,762 |
| Operating Margin | 26.7% | 25.4% | 24.7% | 21.2% | 28.7% |
| Net Income ($M) | $9,771 | $9,542 | $10,714 | $10,631 | $13,107 |
| Net Margin | 25.3% | 22.2% | 23.4% | 22.6% | 27.3% |
| EPS (diluted) | $2.25 | $2.19 | $2.47 | $2.46 | $3.04 |
| Free Cash Flow ($M) | $11,258 | $9,534 | $9,747 | $4,741 | $5,296 |
| Annual DPS | $1.680 | $1.760 | $1.840 | $1.940 | $2.040 |
| Total Debt ($M) | $42,761 | $39,149 | $42,064 | $44,522 | $45,492 |
| Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) | Buyback Yield |
|---|---|---|---|---|
| 2018 | 4250.0M | — | — | — |
| 2019 | 4310.0M | +1.4% | — | — |
| 2020 | 4349.0M | +0.9% | — | — |
| 2021 | 4340.0M | -0.2% | $1,200 | 0.4% |
| 2022 | 4350.0M | +0.2% | $800 | 0.2% |
| 2023 | 4339.0M | -0.3% | $500 | 0.2% |
| 2024 | 4320.0M | -0.4% | $200 | 0.1% |
| 2025 | 4313.0M | -0.2% | — | — |
KO has been reducing shares modestly (≈0.3-0.5%/yr), but buybacks have slowed dramatically since 2022. The 2024 FCF shortfall ($4.7B vs $9.7B in 2023) was driven by working capital timing and one-time items. Berkshire Hathaway (~9.2% stake) has not been a net seller. Buyback yield is negligible at current pace — the dividend (2.78% yield, 64-year growth streak) is the primary capital return mechanism.
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.30% | 10-yr US Treasury yield |
| Beta (β) | 0.350 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 6.23% | Ke = Rf + β × ERP |
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 3.0% | 2.0% | 2.0% | 6.23% | $51 | ▼32.8% |
| 📊 Base | 5.0% | 3.5% | 3.0% | 6.23% | $73 | ▼5.2% |
| 🚀 Bull | 7.0% | 5.0% | 3.5% | 6.23% | $96 | ▲25.7% |
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $2.101 | $1.978 | $1.98 |
| Year 2 | Stage 1 | $2.164 | $1.918 | $3.90 |
| Year 3 | Stage 1 | $2.229 | $1.860 | $5.76 |
| Year 4 | Stage 1 | $2.296 | $1.803 | $7.56 |
| Year 5 | Stage 1 | $2.365 | $1.748 | $9.31 |
| Year 6 | Stage 2 | $2.412 | $1.679 | $10.99 |
| Year 7 | Stage 2 | $2.460 | $1.612 | $12.60 |
| Year 8 | Stage 2 | $2.510 | $1.548 | $14.14 |
| Year 9 | Stage 2 | $2.560 | $1.486 | $15.63 |
| Year 10 | Stage 2 | $2.611 | $1.427 | $17.06 |
| Terminal | — | TV=$62.96 | PV(TV)=$34.40 (67% of IV) | $51.46 |
| Intrinsic Value | — | — | PV(Divs) $17.06 + PV(TV) $34.40 | $51.46 |
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $2.142 | $2.016 | $2.02 |
| Year 2 | Stage 1 | $2.249 | $1.993 | $4.01 |
| Year 3 | Stage 1 | $2.362 | $1.970 | $5.98 |
| Year 4 | Stage 1 | $2.480 | $1.947 | $7.93 |
| Year 5 | Stage 1 | $2.604 | $1.925 | $9.85 |
| Year 6 | Stage 2 | $2.695 | $1.875 | $11.73 |
| Year 7 | Stage 2 | $2.789 | $1.827 | $13.55 |
| Year 8 | Stage 2 | $2.887 | $1.780 | $15.33 |
| Year 9 | Stage 2 | $2.988 | $1.734 | $17.07 |
| Year 10 | Stage 2 | $3.092 | $1.690 | $18.76 |
| Terminal | — | TV=$98.61 | PV(TV)=$53.88 (74% of IV) | $72.64 |
| Intrinsic Value | — | — | PV(Divs) $18.76 + PV(TV) $53.88 | $72.64 |
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $2.183 | $2.055 | $2.05 |
| Year 2 | Stage 1 | $2.336 | $2.070 | $4.12 |
| Year 3 | Stage 1 | $2.499 | $2.085 | $6.21 |
| Year 4 | Stage 1 | $2.674 | $2.100 | $8.31 |
| Year 5 | Stage 1 | $2.861 | $2.115 | $10.42 |
| Year 6 | Stage 2 | $3.004 | $2.091 | $12.51 |
| Year 7 | Stage 2 | $3.154 | $2.066 | $14.58 |
| Year 8 | Stage 2 | $3.312 | $2.042 | $16.62 |
| Year 9 | Stage 2 | $3.478 | $2.019 | $18.64 |
| Year 10 | Stage 2 | $3.652 | $1.995 | $20.64 |
| Terminal | — | TV=$138.44 | PV(TV)=$75.65 (79% of IV) | $96.29 |
| Intrinsic Value | — | — | PV(Divs) $20.64 + PV(TV) $75.65 | $96.29 |
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 4.2% | $98 | $116 | $144 | $197 | $324 |
| 4.7% | $82 | $94 | $111 | $139 | $189 |
| 5.2% | $71 | $79 | $90 | $107 | $133 |
| 5.7% | $62 | $68 | $76 | $87 | $103 |
| 6.2% | $55 | $60 | $66 | $73 | $84 |
| 6.7% | $50 | $53 | $58 | $63 | $71 |
| 7.2% | $45 | $48 | $52 | $56 | $61 |
| 7.7% | $42 | $44 | $46 | $50 | $54 |
| 8.2% | $38 | $40 | $42 | $45 | $48 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
| Company | Ticker | P/E | EV/EBITDA | P/FCF | Div Yield | Notes |
|---|---|---|---|---|---|---|
| PepsiCo | PEP | 21.5x | 15.1x | 28.2x | 3.4% | Diversified food & beverage; higher debt |
| Dr Pepper Snapple | KDP | 22.8x | 15.8x | 35.1x | 2.6% | Smaller, faster-growing portfolio |
| Unilever | UL | 19.2x | 13.5x | 22.5x | 3.5% | Global FMCG; lower margins than KO |
| Procter & Gamble | PG | 24.1x | 17.2x | 25.8x | 2.4% | Premium consumer staples comp |
| KO (5-yr own history) | — | 23.5x | 19.8x | 45.2x | 3.0% | Average 2020-2024 valuation |
| Coca-Cola | KO | 25.2x | 22.3x | 62.3x | 2.7% | Current: premium to 5-yr avg |
| Metric | Value |
|---|---|
| Annual DPS | $2.040 |
| Current Yield | 2.66% |
| Consecutive Growth Years | 64 |
| 1-yr DPS CAGR | +5.1% |
| 3-yr DPS CAGR | +3.6% |
| 5-yr DPS CAGR | +4.0% |
| 10-yr DPS CAGR | +5.4% |
| Payout Ratio (DPS/EPS) | 67.0% |
| FCF Payout Ratio | 38.5% |
| Sustainability Verdict | Safe |
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $2.25 | — | — | — | Actual |
| 2022 | $2.19 | — | — | — | Actual |
| 2023 | $2.47 | — | — | — | Actual |
| 2024 | $2.46 | — | — | — | Actual |
| 2025 | $3.04 | — | — | — | Actual |
| 2026 | $3.14 | $3.32 | $3.42 | 30 | Estimate |
| 2027 | $3.31 | $3.56 | $3.68 | 29 | Estimate |
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $38.7B | — | — | — | Actual |
| 2022 | $43.0B | — | — | — | Actual |
| 2023 | $45.8B | — | — | — | Actual |
| 2024 | $47.1B | — | — | — | Actual |
| 2025 | $47.9B | — | — | — | Actual |
| 2026 | $46.9B | $50.5B | $52.0B | 30 | Estimate |
| 2027 | $47.5B | $51.4B | $53.8B | 29 | Estimate |
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Peter Grom | UBS | Strong Buy | $90 | +17.4% |
| Kaumil Gajrawala | Jefferies | Strong Buy | $90 | +17.4% |
| Steve Powers | Deutsche Bank | Strong Buy | $86 | +12.2% |
| Andrea Teixeira | JP Morgan | Buy | $83 | +8.3% |
| Lauren Lieberman | Barclays | Buy | $70 | -8.7% |
Bull Case: Coca-Cola is the ultimate compounder — a 64-year dividend growth streak, the world's strongest brand, and a franchise model that generates 62% gross margins and 29% operating margins with minimal capital intensity. Management's 5-6% dividend growth target is well-supported by pricing power (5%+ price/mix in 2024-25), category expansion beyond soda, and continued share buybacks. At $76.63, the stock yields 2.7% with a 5%+ dividend growth rate, implying a total return of ~8% — competitive with most fixed-income alternatives. If KO sustains 5-6% EPS growth and the market re-rates toward historical P/E, fair value is $85-90.
Bear Case: The primary risk is obesity/sugar regulation — soda remains the core profit engine, and accelerating sugar taxes or labeling mandates could compress margins. FCF has been volatile ($4.7B in 2024 vs $9.7B in 2023), and the company carries $45.5B in debt. Revenue growth is modest (1.9% in 2025), and volume headwinds in developed markets persist. At 25x earnings, KO trades at a premium to its 5-year average, leaving limited multiple expansion potential.
Base Case Assumption: KO delivers 5% dividend growth in Stage 1 (aligned with management guidance and 5-year track record), fading to 3.5% in Stage 2 and 3.0% terminal. The 3.0% terminal rate reflects pricing power above long-run inflation plus modest volume growth. Ke at 6.23% reflects the ultra-low beta (0.35) and quality premium embedded in KO's moat. Under these assumptions, fair value is approximately $72-73 — modestly below the current price, suggesting KO is slightly expensive at $76.63.
Compensation: Equity-based compensation present
Roberto Críspulo Goizueta Cantera (November 18, 1931 – October 18, 1997) was a Cuban-born American business executive who served as the chairman, president, and chief executive officer (CEO) of The Coca-Cola Company from August 1980
Amazingly, he introduced over 500 new products, including a touchscreen soda fountain that could dispense 165 different flavor combinations. He retired in 2017 due to slowing sales. ... James Quincey became CEO of Coca-Cola in 2017.
After Martin Luther King Jr. won the 1964 Nobel Peace Prize, plans for an interracial celebratory dinner in still-segregated Atlanta were not initially well supported by the city's business elite until Coca-Cola intervened. J. Paul Aus
The company extended its multi‑decade dividend increase streak through 2024 and into 2025, backed by an investment‑grade balance sheet and disciplined capital allocation. Robust free cash flow near $9–10 billion in 2025 pro
(a) Free cash flow = net cash provided ... paid in 2024, Non-GAAP; (c) Free cash flow excluding the fairlife contingent consideration payment = free cash flow excluding the Company’s fairlife contingent consideration payment that was made i
- good benefits
- work-life balance
- recommend
How satisfied are employees working at The Coca-Cola Company?83% of The Coca-Cola Company employees would recommend working there to a friend based on Glassdoor reviews. Employees also rated The Coca-Cola Company 3.8 out of 5 for work life
Feb 8, 2025 · Project manager · Former employee · Cairo, Cairo Governorate · Recommend · CEO approval · Business Outlook · Pros · Great company Culture focus on lean and continuous improvement · Cons · Flat organization wit
6,382 reviews from The Coca-Cola Company employees about The Coca-Cola Company culture, salaries, benefits, work-life balance, management, job security, and more.
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$67 | Begin position |
| Tier 2 — Add | ≤$62 | Add on weakness |
| Tier 3 — Full | ≤$49 | Full allocation |
| Sell Alert | ≥$84 | Above fair value — consider trimming |
Verdict: Hold. At $76.63, Coca-Cola trades modestly above our base-case DDM fair value of ~$72-73, implying roughly 5% downside to intrinsic value. The 2.7% dividend yield with 5%+ growth provides an attractive ~8% total return — but the premium valuation (25x P/E vs 5-year average of 23.5x) limits near-term upside. The dividend is rock-solid (64-year streak, 67% payout ratio), and the brand moat is impenetrable, but this is a name to add on weakness rather than chase at current levels.
Starter position below $67 (Base IV × 0.92), add aggressively below $62 (Bear IV area). Full position reserved for $60 or below, where the yield would exceed 3.5% and the risk/reward shifts decisively in investors' favor. Sell alert above $82 — well above our fair value estimate.
| Metric | Value |
|---|---|
| Shares Held | 3,418.19 |
| Average Cost Basis | $62.29 |
| Current Market Value | $261,936 |
| Unrealized P&L | $+49,017 (+23.0%) |
| Annual DPS | $2.120/yr |
| Annual Dividend Income | $7,247/yr |
| Current Yield (at price) | 2.77% |
| Yield on Cost | 3.40% |
| vs Target (~$200K) | $261,936 / $200,000 (131%) |
| Assumption | Rationale / Notes |
|---|---|
| DPS Base | Using FY2025 DPS of $2.04 as the DDM base. Current forward DPS is $2.12 (raised Q1 2026 to $0.53/qtr from $0.51), but we anchor to the last full fiscal year for consistency. This is conservative — using $2.12 would add ~$4-5 to intrinsic value. |
| Ke (6.23%) | Ke = Rf (4.3%) + β (0.35) × ERP (5.5%) = 6.23%. KO's beta of 0.35 reflects extremely low market correlation — one of the lowest in the S&P 500. The resulting Ke is well below most discount rates, producing a high terminal value multiple. This is appropriate for a business with KO's stability and pricing power. |
| Growth Rates | Stage 1 (5%): Aligned with management's long-term organic revenue growth target of 4-6% and dividend growth track record (5.1% 3-yr CAGR, 5.4% 10-yr CAGR). Stage 2 (3.5%): Gradual fade reflecting slower long-term GDP + pricing power. Terminal (3.0%): Nominal GDP plus pricing power, appropriate for a brand with KO's moat. |
| FCF Normalization | FY2024 FCF of $4.7B was depressed by one-time working capital timing items; FY2025 FCF recovered to $5.3B but remains well below the $9.7-11.3B range of 2021-2023. The DDM approach bypasses FCF volatility by anchoring to DPS, which is far more stable and predictable. |
| Analyst Calibration | Base IV of ~$72-73 is ≈13% below analyst consensus PT of $83.20. This gap primarily reflects the ultra-low Ke (6.23%) producing a terminal value that is very rate-sensitive. A 50bp increase in Ke would push Base IV down ~$8. Analysts likely use a slightly higher discount rate or more aggressive near-term growth assumptions. Our DDM is conservative. |
| Payout Ratio | 67% payout ratio is safe for a consumer staples name. The 64-year dividend growth streak and management's explicit commitment to dividend growth (targeting 5-6% annually) make DPS the most reliable cash flow metric for this company. |