After Earnings, Is Coca-Cola Stock a Buy, a Sell, or Fairly Valued?

Coca-Cola released its first-quarter earnings report on April 28. Here’s Morningstar’s take on Coca-Cola’s earnings and stock.

Key Morningstar Metrics for Coca-Cola

• Fair Value Estimate
  : USD 74.00
• Morningstar Rating
  : ★★★
• Morningstar Economic Moat Rating
  : Wide
• Morningstar Uncertainty Rating
  : Low

What We Thought of Coca-Cola’s Q1 Earnings

Coca-Cola’s organic revenue rose 10% in the first quarter, driven by 2% growth in price/mix and an 8% increase in volume. Comparable operating profit grew 12%, as margin expanded 70 basis points to 33.8% and comparable earnings per share grew 18.0% to USD 0.86.

Why it matters: Coca-Cola started the year off strong, as its marketing, pricing, and innovation efforts landed well with consumers and led to value share gain in the total nonalcoholic ready-to-drink beverages market.

• Coca-Cola’s marketing efforts tailored to local cultural occasions bore fruit, increasing its number of weekly drinkers. Moreover, its focus on products across value and premium should help drive balanced growth from both volume and price/mix as the year progresses.
• The first quarter benefited from an earlier Easter, but the fourth quarter will have six fewer days than the prior year. So, while the first quarter was very strong, we expect performance to moderate in the near term.

The bottom line: We don’t plan a material change to our USD 74 fair value estimate per share for wide-moat Coca-Cola. We view shares as fairly valued after a 15% run year to date versus the 5% rise in the Morningstar US Market Index.

• The company maintained 2026 organic revenue growth guidance of 4%-5% but raised comparable EPS growth guidance to 8%-9% (from 7%-8%). Our preprint estimate of 8.1% remains within range, so we don’t expect a significant change to our forecast.
• We see more attractive upside in wide-moat PepsiCo shares, as we think the market underappreciates PepsiCo’s continued improvement. As it continues to focus on innovation and affordability, we forecast the top line to grow at mid-single digits annually over the next 10 years.

Fair Value Estimate for Coca-Cola

With its 3-star rating, we maintain that Coca-Cola’s stock is fairly valued compared with our long-term fair value estimate of USD 74. Our intrinsic valuation now implies a 23 times multiple against our adjusted 2026 earnings estimate. Our mid-single-digit sales CAGR projection over the next 10 years is driven by strong emerging market growth (we forecast Latin America and the Asia-Pacific combined to make up 35% of overall sales by 2035, up from 24% in 2025) and expansion in nonsparkling categories (sports and energy drinks) in product assortment and distribution channels.

Read more about Coca-Cola’s fair value estimate.

Economic Moat Rating

We believe Coca-Cola has built a wide economic moat around its global beverage operations based on strong intangible assets and a significant cost advantage that will enable the company to deliver excess investment returns above its cost of capital over and beyond the next 20 years. We have modeled the company to generate returns on invested capital, or ROICs, including goodwill, that average nearly 50% throughout the duration of our 10-year explicit forecast, comfortably surpassing our estimate of its weighted average cost of capital at 7%.

Read more about Coca-Cola’s economic moat.

Financial Strength

We believe Coca-Cola has a strong balance sheet and ample liquidity to weather macroeconomic volatilities and invest for long-term growth. The company had USD 16 billion in cash and short-term investments on its balance sheet as of December 2025, close to USD 5 billion in unused backup lines of credit for general-purpose use, and a well-established commercial paper program in the US enabling the firm to consistently access short-term funding at low rates. Leverage is manageable, with net debt/adjusted EBITDA at 2 times in 2025, within its long-term target of 2 to 2.5 times. We expect the metric to hold at low levels in the coming years.

Read more about Coca-Cola’s financial strength.

Risk and Uncertainty

We assign a Low Uncertainty Rating to Coca-Cola. We see long-term bottler alliances as crucial to its business model and return profile, but in periods of high inflation, these relationships could be pressured, as bottlers tend to bear the brunt of cost increases.

Coke has high exposure to international markets (over two-thirds of both revenue and profits), which leads to stepped-up volatility in its operations compared with domestically focused peers. As consumers become increasingly health-conscious, Coke faces the challenge of reducing the health impact of its beverages without compromising on the distinct taste that sits at the core of brand loyalty. We don’t see environmental, social, or governance risks to materially affect Coke’s operations or investment returns.

Read more about Coca-Cola’s risk and uncertainty.

KO Bulls Say

• Coke can leverage strong bottler relationships in underpenetrated emerging markets to drive volume growth with classic recipes and new products tailored to local tastes.
• Heavy investments in a digitalized supply chain and data analytics have better aligned Coke and its bottlers in product planning, manufacturing, and go-to-market strategy.
• Strategic acquisitions in attractive beverage categories, including premium dairy, align with consumer preferences and should further buoy sales expansion.

KO Bears Say

• Secular headwinds in carbonated soft drink demand in developed markets are a challenge to Coca-Cola’s long-term growth outlook.
• The company’s brand portfolio and product lineup in nonsparkling categories are less robust, and heavy investments are needed to bolster its competitive position.
• With 60% of revenue from international markets, Coke faces constant currency fluctuations that drive volatilities in reported earnings.

This article was compiled by Jillian Moore.