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Story Continues

• Wondering if Coca Cola at around $70 a share is still a sweet deal or if most of the upside has already been poured out? You are not alone, and that is exactly what we are going to unpack here.

• Despite a recent 3.3% pullback over the last week, the stock is still up 2.6% over 30 days, 13.9% year to date, and 54.4% over 5 years. This suggests the long term story has remained resilient even as short term sentiment wobbles.

• Much of the recent share price action has been shaped by shifting expectations around consumer staples as investors weigh sticky inflation against the appeal of defensive, cash generating brands. Coca Cola continues to feature in discussions about companies with strong pricing power and global diversification. At the same time, commentary around changing consumer preferences, from sugar free beverages to ready to drink coffee and energy drinks, has kept the debate alive about how much growth runway the company still has.

• On our numbers, Coca Cola scores a 3/6 valuation score, meaning it screens as undervalued on half of our checks. This makes it a useful case study to compare classic valuation methods, and later on we will look at a more nuanced way to think about what this stock may be worth.

Coca-Cola delivered 15.3% returns over the last year. See how this stacks up to the rest of the Beverage industry.

A Discounted Cash Flow (DCF) model estimates what a business is worth today by projecting the cash it can generate in the future and then discounting those cash flows back into today’s dollars.

For Coca Cola, the latest twelve month free cash flow is about $5.6 billion. Analysts and our model expect this to rise steadily, with projections reaching roughly $11.9 billion in 2026 and continuing to climb to around $19.4 billion by 2035. Only the first few years are based on analyst forecasts, with the later years extrapolated using Simply Wall St growth assumptions.

When all those future cash flows are discounted back using a 2 Stage Free Cash Flow to Equity model, we arrive at an intrinsic value of about $89.90 per share. Compared with a market price near $70, the DCF suggests Coca Cola is trading at roughly a 21.6% discount, indicating potential upside if these cash flow projections occur as expected.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Coca-Cola is undervalued by 21.6%. Track this in your watchlist or portfolio, or discover 914 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Coca-Cola.

For consistently profitable companies like Coca Cola, the price to earnings ratio is a practical way to gauge how much investors are paying for each dollar of current profits. It naturally blends expectations for future growth with perceptions of risk, since faster growing, lower risk companies usually command higher PE ratios, while slower or riskier businesses tend to trade on lower multiples.

Coca Cola currently trades on a PE of about 23.26x. That is above the Beverage industry average of roughly 17.50x, but below the broader peer group average of around 27.23x. This suggests investors see it as higher quality than the typical beverage stock but not as aggressively valued as some peers. Simply Wall St’s proprietary Fair Ratio for Coca Cola is 23.08x, which reflects what the multiple should be given its growth outlook, profitability, industry, market cap and risk profile. Because this Fair Ratio is tailored to the company’s fundamentals, it provides a more precise anchor than broad peer or industry comparisons alone.

With the actual PE only slightly above the Fair Ratio, Coca Cola’s valuation looks very close to fair value on this measure.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1441 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of Coca Cola’s business with a set of numbers like future revenue, earnings, margins and a fair value estimate, then compare that to today’s share price.

A Narrative is your story behind the numbers, a concise explanation of how you think the company will grow, how profitable it can be, what risks matter most and therefore what you believe the stock is actually worth.

On Simply Wall St’s Community page, millions of investors use Narratives as an accessible tool that links a company’s story to a financial forecast and then to a fair value. This helps them quickly see whether their view suggests buy, hold or sell when set against the current price. Those Narratives are dynamically updated as new earnings, news or guidance is released.

For Coca Cola, for example, one investor Narrative might see fair value closer to $67 per share based on modest growth and a cautious view on regulation. Another might argue for a value around $78 per share by assuming stronger emerging market demand and higher long term margins. By comparing each of these fair values to the live market price, both investors get a clear, actionable signal that fits their own perspective.

For Coca-Cola, however, we will make it really easy for you with previews of two leading Coca-Cola Narratives:

🐂 Coca-Cola Bull Case

Fair value: $71.00 per share

Implied discount: -0.8%

Revenue growth assumption: 6.64%

• Sees Coca-Cola as a resilient, recession tested global brand with a decades-long dividend track record that appeals to conservative, income-focused investors.

• Expects steady growth driven by emerging markets and digital initiatives, while acknowledging risks from FX volatility, tariffs, regulation and sustainability controversies.

• Assumes stable mid 20s profit margins, ongoing buybacks and a premium P/E multiple, leading to a fair value close to today’s price and a broadly fairly valued stance.

🐻 Coca-Cola Bear Case

Fair value: $67.50 per share

Implied premium: 4.4%

Revenue growth assumption: 5.23%

• Frames Coca-Cola as a high-quality, cash-generative dividend aristocrat whose valuation is highly sensitive to small moves in discount rates.

• Models solid but moderating growth over 3, 5 and 10 year horizons, with strong free cash flow and sustained premium margins but gradually compressing valuation multiples.

• Concludes that, on a DCF view with a 6.25% discount rate, KO is trading modestly above intrinsic value, leaving only limited upside at current levels.

Do you think there’s more to the story for Coca-Cola? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include KO.

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