New: Introducing the Finviz Crypto Map

Learn More

The Biggest Takeaway From Coca-Cola's July 22 Earnings Report

By Neil Patel | August 04, 2025, 8:05 AM

Key Points

  • Coca-Cola's revenue and earnings both beat analyst estimates in the fiscal 2025 second quarter.

  • Thanks to a key competitive advantage, the company is able to consistently flex its pricing power.

  • Dividend investors will likely find the stock a compelling portfolio addition.

Coca-Cola (NYSE: KO) reported financial results for its second quarter (ended June 27) recently. The business exceeded Wall Street estimates, with revenue of $12.6 billion and adjusted earnings per share of $0.87 both coming in ahead of analyst expectations. Shareholders certainly like to see this kind of performance.

However, finding the biggest takeaway from this beverage stock's July 22 earnings report requires investors to look past the headline figures. Instead, focus on something that matters over the long term. Here's what you should know about one of Coca-Cola's most attractive business qualities.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Many glass bottles filled with cola with red caps are lined up.

Image source: Getty Images.

Being able to ask customers to pay more

Coca-Cola's organic revenue, which is a non-GAAP metric that excludes the impact of acquisitions, divestitures, and currency fluctuations, increased by 5% in the latest fiscal quarter. This figure was negatively impacted by concentrate sales, which declined 1%. But it was boosted by a 6% jump in price/mix. "Our price mix growth of 6% was primarily driven by approximately five points of pricing actions and one point of favorable mix," said CFO John Murphy on the Q2 2025 earnings call.

This highlights what I believe is a key contributor to Coca-Cola's success: proven pricing power. This benefit arising from its ability to raise prices yet retain business comes up in virtually all of its earnings reports. During the first quarter of this fiscal year, price/mix growth was 5%.

Famed investor Warren Buffett believes pricing power is one of the clearest signals that a company is high quality. This probably explains why Berkshire Hathaway is a massive shareholder in Coca-Cola.

In Coca-Cola's case, the ability to consistently ask customers to pay more demonstrates just how powerful the brand is. This intangible asset is precisely what makes up the company's economic moat. And that supports Coca-Cola's staying power: The business has been around for well over a century.

It has 200 different brands sold in more than 200 countries and territories. A whopping 2.2 billion servings are consumed every day. Coca-Cola has the leading market share in the industry. And consumers have come to expect a consistent product. Add in Coca-Cola's top-notch marketing campaigns, and the company has figured out a way to drive deep emotional connections with customers.

This market positioning means that Coca-Cola will likely be able to continue increasing prices indefinitely. Of course, the price hikes must be within reason. But the point is that because consumers have developed an affinity to the brand, there is loyalty that Coca-Cola can keep leveraging over time.

Don't expect huge returns from Coca-Cola

Coca-Cola is a fantastic business thanks primarily to its pricing power and brand positioning. This has helped it generate robust profits, to the tune of $3.8 billion in net income in Q2. That translates to a net profit margin of 30%.

The stock might be a wise investment choice for those who like to generate income from their holdings. Coca-Cola's strong profitability has allowed the leadership team to raise the dividend in a jaw-dropping 63 straight years, with the latest bump being approved earlier in 2025. Its dividend yield of 2.97% is well ahead of the 1.25% that the average company in the S&P 500 index pays.

However, investors looking to score huge returns will want to think twice. The stock won't provide enough capital appreciation to outperform the market. Coca-Cola simply doesn't register huge growth. This is an extremely mature company. Its drinks are already sold in every corner of the world, with minimal opportunities to drive meaningful expansion. Shares have significantly underperformed the S&P 500 in the past decade.

In the rare event that Coca-Cola's P/E multiple dips well below 20, investors shouldn't buy the stock. But those searching for dividend income will have a different view.

Should you invest $1,000 in Coca-Cola right now?

Before you buy stock in Coca-Cola, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Coca-Cola wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $624,823!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,064,820!*

Now, it’s worth noting Stock Advisor’s total average return is 1,019% — a market-crushing outperformance compared to 178% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 29, 2025

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.

Mentioned In This Article

Latest News