The Coca-Cola Company (KO): A Bull Case Theory

We came across a bullish thesis on The Coca-Cola Company on Valueinvesting subreddit by indian_coder. In this article, we will summarize the bulls’ thesis on KO. The Coca-Cola Company's share was trading at $69.17 as of July 25^th. KO’s trailing and forward P/E were 24.53 and 23.31 respectively according to Yahoo Finance.

Coca-Cola (KO) reported Q2 2025 earnings with profits surpassing expectations, driven by pricing power that offset softer demand, as global unit volumes declined 1% while organic revenue grew 5%. Management reaffirmed full-year organic revenue growth guidance of 5–6% and raised currency-neutral EPS growth expectations to about 8%, acknowledging some currency headwinds. Analysts forecast 5–6% revenue and 8–11% EPS growth over the next few years, reflecting steady but unspectacular growth.

Morningstar pegs fair value at $69, broadly in line with the current share price, while Wall Street price targets range from $70–84, implying limited near-term upside and raising questions about the margin of safety for value investors. Innovation and portfolio diversification, such as continued momentum in Coke Zero Sugar, remain crucial to sustaining pricing-led revenue growth amid a competitive beverage landscape and evolving consumer preferences.

The 2.9% dividend yield, supported by a 75–80% payout ratio and a long track record of increases, provides a reliable income stream, though the high payout limits reinvestment flexibility. For income-focused investors, KO offers a stable return profile, but for those seeking capital appreciation, the case hinges on management’s ability to reignite volume growth while defending margins.

Currency pressures and competitive intensity add to execution risks, though predictable cash flows and consistent capital returns lend resilience. With shares trading near perceived fair value, investors must weigh a dependable dividend and modest growth against a premium valuation and limited upside, making KO a defensive holding offering income stability but only moderate long-term appreciation potential.

Previously we covered a bullish thesis on PepsiCo, Inc. (PEP) by Charts&Companies in May 2025, which highlighted its diversified portfolio, attractive valuation versus Coca-Cola, and stronger capital efficiency. The company’s stock price has depreciated approximately 47% since our coverage, as muted sales and sentiment pressured performance. The thesis still stands given resilient cash flows and valuation support. indian_coder shares a similar view but emphasizes Coca-Cola’s pricing power and defensive growth.

The Coca-Cola Company is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 87 hedge fund portfolios held KO at the end of the first quarter which was 81 in the previous quarter. While we acknowledge the potential of KO as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.