Coca-Cola (KO) isn’t a “growth story” stock: it’s a global franchise, rare pricing power, and a margin machine. At $80.56 (at/near highs), the real question isn’t quality but entry price. At these levels, KO trades like a premium defensive asset. A correction toward $72–$68 would restore a much more rational risk/reward setup.
1) Consolidated financial performance (FY 2024 – FY 2025 – TTM)
| Key metric | FY 2024 | FY 2025 | TTM | Trend |
|---|---|---|---|---|
| Revenue | $46,766M | $48,392M | $48,392M | +3.5% |
| EBITDA | $14,908M | $16,233M | $16,230M | +8.9% |
| Net income | $10,631M | $13,107M | $13,107M | +23.3% |
| Diluted EPS | $2.46 | $3.04 | $3.04 | +23.6% |
| Free Cash Flow | $4,741M | $5,296M | $5,296M | +11.7% |
| Shares outstanding | 4,302M | 4,302M | 4,302M | stable |
Key takeaways
- Moderate top-line growth, but profitability is accelerating (net income and EBITDA growing faster than revenue).
- KO “wins” mostly through pricing + mix + cost discipline, more than explosive volumes.
- Very stable share count (no dilution): classic “core holding” profile.
2) Margins: the “premium defensive” signature
| Margin | FY 2024 | FY 2025 | TTM | Read-through |
|---|---|---|---|---|
| Gross margin | 61.16% | 61.76% | 61.75% | very high & stable |
| Operating margin | 29.58% | 31.38% | 31.37% | clear improvement |
| Net margin | 22.73% | 27.09% | 27.09% | strong jump |
Core interpretation
- An ~31% operating margin for a global consumer giant is a moat signal: brand + distribution + pricing power.
- Watch-out: annual figures can be influenced by “unusual expenses” (non-recurring items), though the 2025/TTM direction remains very strong.
3) Cash flows & capital allocation
| Cash flow item | FY 2024 | FY 2025 | TTM | Strategic read |
|---|---|---|---|---|
| Operating cash flow | $6,805M | $7,408M | $7,408M | +8.9% |
| CapEx | -$2,064M | -$2,112M | -$2,112M | steady reinvestment |
| Free Cash Flow | $4,741M | $5,296M | $5,296M | +11.7% |
| Dividends paid (cash) | -$8,359M | -$8,779M | -$8,779M | very generous |
| Cash from investing | $2,524M | $1,271M | $1,271M | includes asset sales |
| Net change in cash | +$1,796M | -$478M | -$478M | cash largely returned |
Important notes
- Dividends > FCF in the period ($8.779B vs $5.296B): KO kept shareholder returns very high, supported by other cash sources/levers (balance-sheet moves, asset rotations, debt, working capital, etc.).
- 2025 investing cash flows include disposals (sale of fixed assets & businesses: $4.918B), which can “boost” a single year. Structurally, KO’s cash engine remains strong.
4) Valuation & price context (share price: $80.56, at highs)
| Metric | Value | Interpretation |
|---|---|---|
| P/E (TTM) | ~26.5x | premium defensive |
| Price / Sales | ~6.23x | expensive for a mature consumer staple |
| Market cap | ~$346.5B | mega-cap core holding |
| Price / FCF (approx.) | ~65x | rich (near-term) |
Valuation take
- The market prices KO as a high-quality safe haven: stability, brand, dividend, visibility.
- The trade-off: at $80.56, margin of safety is thin. A mild sentiment shift (rates, sector rotation, FX, input costs) can trigger a healthy pullback.
Your rational buy zone: $72–$68
- $72 = -10.6% vs $80.56
- $68 = -15.6% vs $80.56
5) Price path scenarios (reference: $80.56)
| Horizon | Target | Scenario | Upside/Downside vs $80.56 |
|---|---|---|---|
| 3–12 months | $68–$72 | correction / digestion | -10.6% to -15.6% |
| 2026 | $78–$85 | yield + stability, multiple holds | -3% to +5% |
| 2027–2028 | $88–$95 | modest expansion + dividend | +9% to +18% |
6) Key risks
| Risk | Impact | Comment |
|---|---|---|
| Elevated valuation | ⚠️ | more sensitive to any disappointment |
| FX / strong dollar | 🔶 | recurring translation headwind |
| Commodities & input costs | 🔶 | margin pressure if pricing slows |
| Dividend > FCF (for the period) | 🔶 | not necessarily structural, but monitor |
| Structurally limited growth | 🔶 | KO relies on pricing/mix more than hypergrowth |
7) Conclusion & recommendation
| Factor | Assessment |
|---|---|
| Business quality | Very high |
| Visibility | Exceptional |
| Pricing power | Very strong |
| Margins | Premium and improving |
| Cash generation | Solid (annual mix to monitor) |
| Profile | Defensive “core” |
Verdict: HOLD / BUY on dips
- At $80.56, KO is a great business… but a demanding price.
- The best risk/reward appears on a pullback into $72–$68 (your defined rational entry zone).
Disclaimer :
This content is for informational purposes only and does not constitute investment advice. All investments carry risk, including the loss of capital. Conduct your own research before making any decision.
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