The Coca‑Cola Company delivered a measured finish to 2025 and set a cautiously upbeat tone for 2026. For Q4, net revenue rose 2% to $11.8B and organic revenue grew 5%, driven by +4% concentrate sales and +1% price/mix; comparable EPS landed at $0.58 (+6% y/y). Full-year net revenue increased 2% to $47.9B, with organic +5% as price/mix (+4%) outpaced modest concentrate growth (+1%). Management issued een 2026 outlook calling for +4–5% organic revenue en +7–8% comparable EPS growth, aided by een small FX tailwind. Everything you need to know about Coca-Cola’s earnings!
What stood out in the print
- Volume resilience, pricing normalization: Global unit case volume was +1% in Q4 (flat FY). Price/mix cooled to +1% in Q4 (after two years of outsized pricing), but concentrate timing (and an extra day) lifted reported sales. Translation: the elasticity picture remains benign, while the era of price-led growth is sliding into mix and execution.
- Margin optics distorted by impairments: Q4 reported operating income fell 32%, largely from a $960M non-cash BODYARMOR trademark impairment and FX; on a comparable basis, operating margin expanded to 24.4% (from 24.0%). Full-year comparable operating margin 31.2% (+120 bps) underscores cost discipline and mix.
- Cash engine intact: FY25 operating cash flow $7.4B and free cash flow $5.3B reflect the $6.1B fairlife contingent consideration outflow; excluding that item, FCF was $11.4B, supporting a 63-year dividend growth streak. Capex was $2.1B.
Regional & category dynamics: the quick read
- North America: Low-single-digit price/mix with concentrate +4%; category leadership in Trademark Coca-Cola and sports drinks helped offset softness in “sparkling flavors.”
- EMEA & Latin America: EMEA showed the healthiest mix (pricing power held); LatAm remained solid despite FX pressure. Asia Pacific lagged on currency and softer mix.
- Portfolio tilt: Zero-sugar platforms and premium adjacencies (e.g., fairlife, sports) kept value share positive in total NARTD, even as mainstream flavored CSDs cooled.
2026 guidance unpacked (and what really matters)
- Topline: +4–5% organic; ~+1% FX tailwind to comparable net revenues; ~–4% M&A drag assuming Coca-Cola Beverages Africa (CCBA) divestiture closes 2H26. The A&D headwind is a mechanical negative to reported growth but is part of the asset-light strategy.
- Earnings: +7–8% comparable EPS vs. $3.00 in 2025, including ~+3% FX tailwind and ~–1% A&D; underlying tax rate ~20.9%. FCF guidance ~$12.2B (CFO ~$14.4B, capex ~$2.2B) underwrites cash returns.
- Near-term cadence: Q1’26 benefits from six extra days; FX is a small tailwind in H1 on current hedges.
Strategy & leadership: transition without drama
The company continues to simplify its portfolio (exiting frozen in the U.S./Canada) and push zero-sugar/premium offerings as consumer tastes shift. Leadership will hand the CEO reins to **Henrique Braun on March 31, 2026; **James Quincey transitions to Executive Chairman—continuity that should keep the flywheel turning while the new org (including a Chief Digital Officer mandate) accelerates execution.
Investment view on Coca-Cola: what the numbers imply
- Thesis: KO’s 2026 plan leans less on price and more on mix, distribution quality, and marketing ROI, with FX finally acting as a modest tailwind. The CCBA sale will dilute reported growth but should improve capital intensity and sharpen concentrate-model economics over time.
- Margin path: Comparable margin expansion remains feasible via pack/price architecture, revenue growth management, and productivity, offset by lingering input-cost pressure in some regions. Impairment noise aside, underlying profitability trends are stable-to-up.
- Cash returns: With ~$12B FCF targeted and capex light, KO retains ample room for dividends and buybacks, even as it funds selective innovation and digitization.
Key risks to the outlook
- Regulatory and tax: Ongoing U.S. tax litigation risk (not in the 20.9% underlying rate), sugar taxes, and evolving labeling regimes. FX relief could reverse.
- Execution on portfolio pruning: U.S./Canada frozen exit and any additional streamlining must be offset by velocity gains in zero-sugar/premium to avoid volume leaks.
- Structural shift: If consumer trade-down accelerates or category growth cools in APAC/LatAm, mix could soften and weigh on price realization.
Base-case forecast for Coca-Cola (analyst’s take)
- 2026 organic revenue: +4.5% (mid-guide), with unit cases +1–2% and price/mix +2–3% as elasticities remain manageable.
- Comparable EPS: $3.21–$3.24 (+7–8% y/y), assuming ~+30–40 bps comparable margin expansion and modest buybacks consistent with 2025 pace.
- Free cash flow: ~$12.0–12.4B, sufficient to support another dividend raise and net repurchases of $0.5–1.0B absent larger M&A.
- Valuation context: At the current price, KO trades like a high-quality cash compounder; upside rests on delivering clean EPS beats and de-risking CCBA timing. (Price shown above updates intraday.)
Conclusion
KO’s Q4/FY25 is a “no-surprises” set that validates the brand, the cash engine, and the pivot from price-led to mix-led growth. 2026 should be incrementally better—not explosive—provided FX stays kind, the CCBA sale is clean, and the leadership transition fuels faster digital and commercial execution. For investors, it’s still about quality and consistency, with optionality from portfolio focus and a lighter asset base.
FAQ on Coca-Cola
Why did reported operating income fall so much in Q4 if margins looked okay?
A large non-cash BODYARMOR trademark impairment (~$960M) and FX masked underlying expansion; on a comparable basis, margins improved.
What’s the story with CCBA and the outlook?
Guidance embeds a ~4% headwind from acquisitions/divestitures assuming the CCBA sale closes in 2H26—a drag to reported growth but a step toward a more asset-light system.
How does leadership change affect the thesis?
Continuity is high: Henrique Braun becomes CEO Mar 31, 2026; James Quincey shifts to Executive Chairman. The new structure adds a Chief Digital Officer to speed execution.
Any near-term boost to Q1 2026?
Yes—six additional days versus Q1 2025 and a small FX tailwind on current rates and hedges.
Disclaimer
This article is for informational purposes only and does not constitute investment advice, an offer, or a solicitation to buy or sell any security. Investing involves risks, including the possible loss of principal. Always do your own research or consult a qualified financial advisor before making investment decisions.
