The Coca-Cola story

What drives the business

• Coca-Cola's franchise model centers on supplying concentrates and syrups to bottlers, with refranchising shifting factories out of the company while retaining the concentrate business.
• The economics differ sharply across operations, with Latin America earning a 64% operating margin versus 6% for Bottling Investments in the quarter to July 2026.
• North America generated $5.4 billion of quarterly revenue, while about 61% of revenue came from outside the United States, making local bottler execution and consumer preferences central to growth.
• In the quarter to July 2026, organic revenue grew 6%, combining a 4% increase in concentrate sales with 2% growth in price/mix, while global volume growth was led by India, China, the United States and Brazil.
• The FIFA World Cup campaign contributed to Trademark Coca-Cola's 5% volume growth and Powerade's 8% growth, while innovation hubs supported locally adapted products such as Sprite+Tea in China and the expansion of Coca-Cola Zero Zero.

What the price assumes

At $87.18, the reverse DCF implies free cash flow after stock pay grows 11.5% a year for ten years, using a 10.2% discount rate.

That compares with delivered growth of -2.1% a year over the last 10 years on the same cash measure.

The TenQ check sets a 0.9% annual growth bar by moving the historical record halfway toward 4%, leaving the implied growth requirement well above both the record and the check.

Value KO on your own assumptions

What could change the story

• Asia Pacific illustrates the tension between volume and pricing: volume grew 8% in the quarter to July 2026, but price/mix declined 9% because of unfavorable mix and affordability initiatives, and the region lost beverage value share as losses in India outweighed gains elsewhere.
• Competitive pressure and retailer consolidation can limit price increases just as ingredients, packaging and transportation costs rise.
• Health concerns, sweetened beverage taxes and restrictions on ingredients or benefit-program eligibility could weaken demand or increase costs, making successful product innovation important.
• TenQ's financial health checks flag near-term liquidity and leverage, with total debt of $43.5 billion against $12.9 billion in cash and short-term investments.
• The 2026 underlying effective tax rate guidance excludes the impact of ongoing litigation with the Internal Revenue Service if Coca-Cola does not prevail.

What to watch next

• The next releases will test the raised 2026 guidance for approximately 5% organic revenue growth and 9% to 10% comparable EPS growth, both non-GAAP, with the latter including approximately 3% currency support.
• Volume, price/mix and operating margins will show whether World Cup-supported demand persists and whether Asia Pacific's affordability initiatives translate into stronger revenue and profit.
• Cash generation will be measured against the 2026 outlook for approximately $14.6 billion of operating cash flow and $2.2 billion of capital expenditures.
• The outlook assumes the pending disposal of African bottling operations closes toward the end of the third quarter or during the fourth quarter of 2026, subject to regulatory approvals.

Sources

• Coca-Cola's earnings release, filed with the SEC
• Its latest 10-Q or 10-K, for the risk factors
• The KO stock report, for every figure and check