Key Morningstar Metrics for Coca-Cola
- : USD 74.00Fair Value Estimate
- : ★★★Morningstar Rating
- : WideMorningstar Economic Moat Rating
- : LowMorningstar Uncertainty Rating
What We Thought of Coca-Cola’s Earnings
Coca-Cola’s KO 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 12.0%, as margin expanded 70 basis points to 33.8% and comparable earnings per share grew 18.0% to $0.86 (all returns in this article are measured on a US dollar basis).
Why it matters: Coca-Cola started the year off strong, as its marketing, pricing, and innovation efforts landed with consumers and led to value share gains 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 per share fair value estimate for wide-moat Coca-Cola. We view shares as fairly valued after a 15% run year to date versus the 5% rise in the 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.
