Assessing Coca-Cola’s Value After Recent Share Slide and Shifting Consumer Trends in 2025

Trying to decide whether to hold, buy, or walk away from Coca-Cola stock? You are definitely not alone. Recently, shares have been wobbling a bit, finishing the past week down 1.4% and dipping 4.9% over the last month. Yet, look a little further back and you will see the kind of steady resilience that has kept investors interested for generations, with a 22.2% gain over three years and 53.3% over five years. The story here is not just about short-term moves; it is about how the market is reassessing Coca-Cola’s growth potential and risk profile in a world of changing consumer habits and market dynamics.

With so much noise, you might be wondering, is KO undervalued or just coasting on its brand? Our latest analysis runs Coca-Cola through six separate valuation checks, from earnings multiples to cash flow, and it comes away with a value score of 4, indicating the company is undervalued on four of the six measures we track. That is no small feat for a giant in its space.

Curious to know which valuation tests Coca-Cola passes and which ones give pause? Next, we will break down each method, letting you see how KO stacks up according to traditional metrics. Plus, there is an even smarter way to think about valuation that goes beyond the usual numbers.

Coca-Cola delivered -4.1% returns over the last year. See how this stacks up to the rest of the Beverage industry.

Approach 1: Coca-Cola Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's value by projecting its future cash flows and then discounting them to reflect what they are worth in today's dollars. This approach is especially useful for mature, cash-generating businesses like Coca-Cola.

For Coca-Cola, the model uses a two-stage Free Cash Flow to Equity method, which takes into account detailed analyst projections for the next several years and then extrapolates further growth. The company’s latest twelve months of free cash flow was negative at approximately $635 million, but analysts expect this to turn around in the coming years. By 2027, Coca-Cola’s free cash flow is forecast to rise to $13.5 billion, with steady annual increases projected for the next decade, eventually reaching $20.3 billion by 2035 according to Simply Wall St's estimates.

Tallying up these forecasts and discounting them to the present, the model calculates an intrinsic value for Coca-Cola stock of $95.13 per share. This is about 29.6% above recent trading levels, indicating a substantial undervaluation based on future cash flow potential.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Coca-Cola.

Our Discounted Cash Flow (DCF) analysis suggests Coca-Cola is undervalued by 29.6%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Coca-Cola Price vs Earnings

The Price-to-Earnings (PE) ratio is widely used to value established, profitable businesses like Coca-Cola because it focuses directly on how much investors are paying for each dollar of net income generated. When a company has a long track record of stable profits and few surprises in its earnings, the PE ratio provides a reliable snapshot of market expectations.

Determining what counts as a “normal” or “fair” PE depends on factors like growth prospects and perceived risks. High-growth or low-risk companies naturally command a higher PE, while mature or riskier firms trade closer to the average or even at a discount. As of now, Coca-Cola trades at a PE of 23.7x, slightly below the average for its global peers at 26.1x, but well above the broader beverage industry’s average of 18.2x. This suggests the market already factors in the brand’s exceptional profitability and resilience.

Simply Wall St's “Fair Ratio” goes further by calculating the PE that Coca-Cola deserves, incorporating not just peer and industry comparisons but also its earnings growth, market position, profit margins, and risk profile. For Coca-Cola, the Fair Ratio is 26.1x. This is very close to the current PE, indicating the stock is priced appropriately when considering all the key fundamentals, not just relative market comparisons.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Coca-Cola Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives. A Narrative is your personal story or point of view about a company, linking what you believe about its business (such as future growth, margins, and risks) directly to a financial forecast and an estimated fair value.

Unlike relying purely on historic ratios or consensus forecasts, Narratives allow you to express why you think Coca-Cola is undervalued, fairly priced, or expensive, and clearly see how your assumptions stack up compared to other investors’ views. Available right within the Simply Wall St Community page, Narratives are a simple and accessible tool that empower millions of investors to test their thinking, share their outlooks, and learn from others.

Narratives make your investment decisions smarter by constantly updating as new information, news, or company results come in. This shows you when changes to revenue, margins, or risks shift your company’s fair value relative to the current price, and helps you answer “Should I buy, hold, or sell?”

For example, the most optimistic Narrative on Coca-Cola right now sees a fair value of $97 per share, while the most skeptical pins it at $54. This highlights how different assumptions and stories behind the numbers can shape radically different conclusions about the same stock.

For Coca-Cola, however, we'll make it really easy for you with previews of two leading Coca-Cola Narratives:

🐂 Coca-Cola Bull Case

Fair Value: $71.00

Current Price vs Fair Value: 5.6% undervalued

Expected Revenue Growth Rate: 6.6%

• Coca-Cola’s brand resilience, stable business model, and dividend aristocrat status appeal to conservative, income-focused investors.
• The company faces opportunities in health-conscious beverages and emerging markets. However, it must navigate risks such as currency swings, tariffs, and evolving consumer trends.
• Digital transformation and continued efficiency support long-term stability. Pressures from valuation and environmental issues are rising.

🐻 Coca-Cola Bear Case

Fair Value: $54.61

Current Price vs Fair Value: 22.7% overvalued

Expected Revenue Growth Rate: 5.5%

• Coca-Cola’s profit growth and margins have been driven by one-time factors. This has masked long-term challenges in revenue growth and diversification.
• The company’s revenue mix is still dominated by carbonated beverages, and efforts to expand in other segments and geographies have had limited impact.
• High payout ratio, a looming tax bill, and reliance on mature markets suggest the PE ratio could contract, putting valuation at risk if growth does not accelerate.

Do you think there's more to the story for Coca-Cola? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com