Coca-Cola remains a quality asset for cautious investors

The Coca-Cola Company once again demonstrates strong quarterly results, yet investors remain cautious, awaiting more attractive entry levels.

The Coca-Cola Company (NYSE: KO) reported stable results for Q2 2025. Revenue increased by 5%, operating margin reached 34.7% compared with 32.8% a year ago, and comparable earnings per share rose 4% to 0.87 USD despite a 1% decline in volumes. The company continued to strengthen its value share in the ready-to-drink non-alcoholic beverage segment, while tight cost control and strategically timed marketing spend supported margin growth. Key headwinds in the past quarter were currency fluctuations and weak sales trends. The 5 percentage points of negative currency impact are already factored into earnings per share growth, and for Q3, management expects roughly 1 percentage point of revenue pressure and 5–6 percentage points on comparable earnings per share. The company confirmed its 2025 guidance, expecting revenue growth of 5–6%, currency-neutral EPS growth of around 8% (approximately 3% including currency and structural factors), and free cash flow of approximately 9.5 billion USD excluding the one-off Fairlife payment.

This article analyses The Coca-Cola Company, outlines its revenue sources, reviews performance for Q1 and Q2 2025, and sets out expectations for the 2025 fiscal year. It also includes a technical analysis of KO, which forms the basis for a share price forecast for The Coca-Cola Company for 2025.

About The Coca-Cola Company

The Coca-Cola Company is one of the world’s largest producers of non-alcoholic beverages. It was founded in 1886 by pharmacist John Stith Pemberton in Atlanta, Georgia. The company went public in 1919, listing on the New York Stock Exchange under the ticker KO.

Coca-Cola manufactures, markets, and sells carbonated soft drinks, juices, water, energy drinks, sports drinks, and tea-based beverages. It owns a portfolio of more than 200 brands, including Coca-Cola, Fanta, Sprite, Minute Maid, and Powerade.

Key competitors include PepsiCo, Nestlé, Keurig Dr Pepper and, in certain categories, local beverage producers.

The Coca-Cola Company’s main financial streams

The Coca-Cola Company’s business model is based on a global franchising and beverage distribution system, with revenue generated from several key sources:

• Sales of concentrates and syrups: this is the company’s primary revenue source, encompassing the sale of concentrates, syrups, and base ingredients to independent bottling partners. These partners produce, bottle, package, and distribute beverages under the Coca-Cola brand. The company earns stable income from the high-margin nature of this segment.
• Sales of finished beverages: Coca-Cola holds stakes in several bottling companies (such as Coca-Cola FEMSA and Coca-Cola HBC) and, in some regions, manages production and distribution independently. Revenue is generated across the entire value chain – from manufacturing through to the sale of finished products.
• Licensing fees and royalties: the company receives income from licences and brand usage. Bottlers pay royalties for the right to sell products under brands such as Coca-Cola, Fanta, Sprite, and others.
• Sales of other non-alcoholic beverages: beyond carbonated drinks, Coca-Cola generates revenue from juices (Minute Maid), water (Dasani, Smartwater), tea and coffee (Gold Peak, Georgia Coffee), energy drinks (Monster, BodyArmor), and sports drinks (Powerade). These brands contribute income through both concentrates and the sale of finished products.
• Advertising and marketing partnerships: indirect revenue streams include participation in joint advertising campaigns with retailers and major distributors, which help to increase sales volumes.

Thus, Coca-Cola’s business model relies on scalability, strong brands, franchising, and a broad product portfolio, enabling revenue generation from both raw materials and finished goods.

The Coca-Cola Company Q1 FY2025 report

On 29 April, The Coca-Cola Company published its Q1 FY2025 report for the period ending 28 March. Below are the key financial figures compared with the same period last year:

• Revenue: 11.13 billion USD (-2%)
• Net profit (GAAP): 3.33 billion USD (+5%)
• Earnings per share: 0.73 USD (+1%)
• Operating margin: 33.8% (+120 basis points)

Revenue by country:

• Europe, Middle East & Africa: 2.66 billion USD (+1%)
• Latin America: 1.48 billion USD (-3%)
• North America: 4.36 billion USD (+3%)
• Asia Pacific: 1.42 billion USD (-4%)

Coca-Cola’s Q1 2025 financial report showed resilient operating results despite revenue pressure, with total revenue down 2% to 11.13 billion USD. The decline was primarily due to adverse currency effects and the refranchising of bottling operations to partners. Operating profit increased by 10%, with operating margin rising to 33.8% from 31.8% a year earlier, reflecting effective cost management, pricing strategy and benefits from refranchising.

Earnings per share rose by 1% to 0.73 USD, despite a significant negative currency impact of 5 percentage points. Global unit case volume grew by 2%, with robust growth recorded in India, China, and Brazil. Sales of Coca-Cola Zero Sugar increased by 14% across all regions.

Free cash flow was negative at -5.51 billion USD, primarily due to a one-off payment of 6.10 billion USD related to the Fairlife transaction. Excluding this item, free cash flow was 558 million USD.

Management reaffirmed its full-year 2025 guidance, forecasting organic revenue growth of 5-6% and non-GAAP EPS growth of 2-3%. Free cash flow was projected at around 9.50 billion USD. For Q2, the company indicated expected currency headwinds of about 3% on revenue and 5-6% on earnings per share.

The Coca-Cola Company Q2 2025 financial report

On 22 July, The Coca-Cola Company released its Q2 2025 financial report for the period ended 27 June. Below are the key financial results compared with the same period last year:

• Revenue: 12.53 billion USD (+5%)
• Net profit (GAAP): 3.81 billion USD (+58%)
• Earnings per share: 0.87 USD (+4%)
• Operating margin: 34.7% (+190 basis points)

Revenue by region:

• Europe, Middle East & Africa: 3.21 billion USD (+6%)
• Latin America: 1.61 billion USD (-1%)
• North America: 5.04 billion USD (+3%)
• Asia Pacific: 1.59 billion USD (+5%)

In Q2 2025, Coca-Cola outperformed expectations across key metrics. Revenue grew by 5%, driven by a 6% contribution from pricing and product mix, offset by a 1% decline in volumes. Adjusted operating margin reached 34.7%, while earnings per share rose 4% to 0.87 USD, despite a 5% negative currency impact. Performance was particularly strong across international markets.

Free cash flow for the first half of the year was negative at 1.4 billion USD, reflecting a one-off payment of 6.1 billion USD related to the Fairlife transaction. Excluding this one-off payment, adjusted free cash flow was positive at 3.9 billion USD.

Coca-Cola updated its Q3 and H2 2025 outlook. The company reaffirmed its full-year guidance for organic revenue growth of 5–6% and raised its forecast for adjusted EPS growth to about 3%, towards the upper end of the previous 2–3% range. For Q3 2025, Coca-Cola expects currency headwinds of around 5–6 percentage points on adjusted EPS and about 1 percentage point on revenue.

Analysis of key growth drivers and risks for The Coca-Cola Company

Key risks identified in Coca-Cola’s Q2 2025 report:

• Sales volumes: global beverage shipments fell 1% from the previous quarter, particularly in Mexico, India, and Thailand. By category, carbonated drinks declined by 1%, sports drinks by 3%, and juice/dairy/plant-based products 4%. If this trend continues, revenue will be supported by price increases, but growth acceleration potential will be limited
• Currency factor: EPS rose only 4%, as exchange rates had a negative impact of about 5 percentage points. For Q3, management has already guided for further pressure of around 1 percentage point on revenue and 5–6 percentage points on EPS. This means that even under normal operations, the business could deliver softer quarterly results
• Taxes: the effective tax rate in 2025 increased to 20.8% from 18.6% a year earlier, reducing net profit relative to 2024.
• Concentrate sales: quarterly concentrate sales may differ significantly from end-consumer beverage volumes, adding volatility to revenue and margin reporting. In Q2, concentrate dynamics matched overall volumes, but management regularly highlights this factor as a source of volatility
• Regional differences and cost pressures: in EMEA, sales volumes are rising but accompanied by higher costs. In Latin America, strong price/mix supports results, though the business faces significant currency headwinds. In Asia-Pacific, volumes fell 3% while pricing and mix grew at a double-digit pace. This divergence heightens operating risks and reduces the predictability of results
• Bottling Investments: the Bottling Investments segment recorded a revenue decline. Operating income fell due to weak sales volumes and the ongoing refranchising process, which continues to weigh on overall segment results

Growth drivers supporting Coca-Cola’s key performance indicators in the future:

• Price/mix and revenue management: organic revenue rose 5%, with price/mix contributing 6%, confirming that pricing architecture, packaging formats and a premium product mix remain strong drivers of gross profit and margin even with weak sales volumes
• Portfolio and brands: sales of Coca-Cola Zero Sugar increased 14%, and the company continues to expand its share in the Non-Alcoholic Ready-To-Drink segment. This supports gross margin and ROIC by shifting focus to more profitable categories
• Operational efficiency: comparable operating margin reached 34.7% through strict cost control and well-timed marketing expenditure, ensuring resilience to currency fluctuations and demand changes
• Global diversification: EMEA continues to see volume growth, North America maintains positive price/mix and growth in comparable operating income, Asia-Pacific posts double-digit price/mix gains, and Latin America delivers strong profit growth in currency-neutral terms despite heavy FX pressure. This structure reduces country-specific risks and enables flexible investment allocation
• 2025 outlook and cash flows: the company reaffirmed its guidance for organic revenue growth of 5–6%, currency-neutral EPS growth of 8%, and expected free cash flow (excluding the Fairlife payment) of about 9.5 bn USD. These metrics provide support for dividends, share buybacks and investment in innovation and marketing

Conclusion: Coca-Cola’s Q2 2025 results show the company remains resilient despite certain headwinds. The main risk remains declining sales volumes in some regions, particularly Latin America and Asia, which could limit growth if consumer demand weakens further. Additional pressure comes from currency fluctuations and a temporary drop in operating cash flow due to large one-off payments. However, these risks are partly offset by strong operating margins, effective price management, stable international momentum, and sustained demand for key brands. The updated full-year guidance, with revenue and non-GAAP earnings growth, underscores management’s confidence in continued financial stability.

Fundamental analysis of The Coca-Cola Company

Below is a fundamental analysis of Coca-Cola following its Q2 2025 results:

• Liquidity and access to financing: at the end of Q2 2025, Coca-Cola had approximately 14.3 billion USD of highly liquid assets, including cash, cash equivalents, short-term investments, and marketable securities. In addition, the company had unused committed credit lines totalling 4.6 billion USD with maturities extending to 2030. Coca-Cola also maintains access to the commercial paper market, where short-term borrowings are primarily in the form of commercial paper with an outstanding balance of 4.04 billion USD. Taken together, these factors provide a comfortable liquidity cushion and ensure flexibility in refinancing and debt management
• Debt and leverage: Coca-Cola’s balance sheet debt at the end of Q2 2025 stood at approximately 44.98 billion USD in long-term obligations, 4.38 billion USD in short-term borrowings, and 0.09 billion USD in current maturities. In total, this amounts to around 49.45 billion USD. After accounting for liquid funds of approximately 14.30 billion USD, the net debt is about 35.15 billion USD. Interest expenses for H1 2025 amounted to 832 million USD against an operating profit of 7.94 billion USD, which translates to an interest coverage ratio of around 9.5x, highlighting a comfortable buffer for debt servicing. A significant part of the debt structure is concentrated in short-term borrowings, providing funding flexibility but at the same time increasing sensitivity to interest rate changes over the short term
• Cash flow and dividend coverage: in H1 2025, Coca-Cola reported a negative operating cash flow of 1.39 billion USD due to a one-off payment of 6.07 billion USD for the acquisition of Fairlife. Excluding this factor, free cash flow would have been around 3.93 billion USD. Management expects that by the end of 2025, free cash flow excluding Fairlife will be about 9.5 billion USD (based on a projected operating cash flow of 11.7 billion USD, less approximately 2.2 billion USD in capital expenditures). This is sufficient to cover dividend payments and moderate share buybacks. For H1, the company paid dividends of 2.28 billion USD. The board of directors has approved a quarterly dividend of 0.51 USD per share (as of 01.10.2025), which at approximately 4.304 billion shares outstanding equates to annual dividend payouts of about 8.8–8.9 billion USD. Therefore, expected free cash flow excluding Fairlife covers cash dividends around 1.1x, leaving room for buybacks

Overall conclusion on the fundamental analysis of The Coca-Cola Company for Q2 2025: the company’s financial stability remains strong. Leverage and interest coverage are at comfortable levels, liquidity is sufficient, and free cash flow supports dividend payments alongside moderate share repurchases. Coca-Cola shares are suitable as a defensive holding with a reliable dividend yield.

Expert forecasts for The Coca-Cola Company stock

• Barchart: 20 of 24 analysts rated Coca-Cola Company shares as Strong Buy, 2 as Moderate Buy, and 2 as Hold, with a forecast range of 70 to 85 USD
• MarketBeat: 16 of 17 analysts gave the shares a Buy rating, and 1 recommended Hold, with a forecast range of 70 to 84 USD
• TipRanks: all 15 analysts surveyed rated the shares as Buy, with a forecast range of 76 to 84 USD
• Stock Analysis: 5 of 14 analysts rated the shares as Strong Buy, 8 as Buy, and 1 as Hold, with a forecast range of 70 to 84 USD

The Coca-Cola Company stock price forecast for 2025

On the weekly chart, Coca-Cola Company shares are trading within an ascending channel near resistance at 72 USD. The release of a third consecutive quarterly report failed to generate the additional demand needed to break this level and reach the upper boundary of the channel. Investors still do not see significant drivers for further share price growth or consider the current level too high to include the shares in portfolios. A potential correction to 64 USD could stimulate demand for Coca-Cola shares. Based on the current share price dynamics, the possible scenarios for KO in 2025 are as follows:

The base case forecast for Coca-Cola shares anticipates a test of support at 64 USD, followed by a rebound and a rise to the upper line of the ascending channel at 80 USD.

The alternative forecast for Coca-Cola stock assumes a breakout above resistance at 72 USD, which could act as a catalyst for further share price growth, with a target at the upper channel line of 80 USD.

Risks of investing in The Coca-Cola Company stock

Investing in Coca-Cola stock involves macroeconomic, industry-specific, and company-level risks that may negatively impact its revenue. The key risks include:

• Shifts in consumer preferences: the growing focus on healthy lifestyles and declining consumption of sugary drinks could negatively affect sales of Coca-Cola’s traditional products, including Coca-Cola and Fanta.
• Regulatory restrictions and taxation: many countries are introducing or considering regulations on advertising and labelling of high-sugar products. These measures may dampen demand and increase operational costs.
• Currency fluctuations: with over half of Coca-Cola’s revenue generated internationally, exchange rate movements – particularly a stronger US dollar– can reduce reported revenue and profit in dollar terms.
• Geopolitical and economic risks in international markets: instability in emerging economies, inflation, trade restrictions, sanctions, or local crises can lead to demand disruptions, supply chain issues, and losses in overseas markets.
• Reliance on franchised bottlers: although Coca-Cola sells concentrates, brand success heavily depends on the performance of bottling partners. Challenges related to logistics, product quality, or operational stability among these partners can negatively impact sales.
• Competition within the beverage industry: Coca-Cola faces strong competition from PepsiCo, Nestlé, Keurig Dr Pepper, and numerous local brands. Increasing competition may result in price pressure, market share losses, or the need for higher marketing expenditure.
• Legal and reputational risks: scandals involving product quality, labour conditions, or partner conduct can damage brand image and result in short-term sales declines.

These risks highlight Coca-Cola’s sensitivity to changes in global consumer trends, regulation, and its operational network, and should be considered by investors when evaluating the company’s outlook.

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