Buy or Sell Coca-Cola Stock?

We believe there are only a couple of things to fear in KO stock given its overall Strong operating performance and financial condition. This is aligned with the stock’s High valuation because of which we think it is Fairly Priced.

Below is our assessment:

Ask yourself – Is holding KO stock risky? Of course it is. High Quality Portfolio mitigates that risk.

Let’s get into details of each of the assessed factors but before that, for quick background: With $301 Bil in market cap, Coca-Cola provides sparkling soft drinks, flavored waters, sports drinks, juice, dairy, plant-based beverages, tea, coffee, and energy drinks through a global network of bottlers, distributors, and retailers.

[1] Valuation Looks High

This table highlights how KO is valued vs broader market. For more details see: KO Valuation Ratios

[2] Growth Is Weak

• Coca-Cola has seen its top line grow at an average rate of 4.0% over the last 3 years
• Its revenues have grown 2.8% from $46 Bil to $48 Bil in the last 12 months
• Also, its quarterly revenues grew 5.1% to $12 Bil in the most recent quarter from $12 Bil a year ago.

This table highlights how KO is growing vs broader market. For more details see: KO Revenue Comparison

[3] Profitability Appears Strong

• KO last 12 month operating income was $15 Bil representing operating margin of 31.3%
• With cash flow margin of 16.0%, it generated nearly $7.6 Bil in operating cash flow over this period
• For the same period, KO generated nearly $13 Bil in net income, suggesting net margin of about 27.3%

This table highlights how KO profitability vs broader market. For more details see: KO Operating Income Comparison

[4] Financial Stability Looks Very Strong

• KO Debt was $47 Bil at the end of the most recent quarter, while its current Market Cap is $301 Bil. This implies Debt-to-Equity Ratio of 15.8%
• KO Cash (including cash equivalents) makes up $16 Bil of $106 Bil in total Assets. This yields a Cash-to-Assets Ratio of 14.9%

[5] Downturn Resilience Is Strong

KO has been more resilient than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• KO stock fell 20.9% from a high of $66.21 on 21 April 2022 to $52.38 on 5 October 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 26 July 2024
• Since then, the stock increased to a high of $73.90 on 22 April 2025 , and currently trades at $69.87

 
2020 Covid Pandemic

• KO stock fell 37.5% from a high of $60.13 on 21 February 2020 to $37.56 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 4 January 2022

 
2008 Global Financial Crisis

• KO stock fell 42.3% from a high of $32.78 on 10 January 2008 to $18.93 on 5 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 17 December 2010

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read KO Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.