How Coca-Cola’s Latest Sales Outlook Shapes Its 2025 Valuation Prospects

Thinking about whether to hold, buy, or steer clear of Coca-Cola stock? You’re not alone. With its iconic brand status and a loyal investor following, Coca-Cola sparks a lot of strong opinions, especially as the stock weathers new market crosscurrents. Over the past week, prices nudged up by 0.6%, while the last month saw a slight dip of 1.2%. Yet, with a steady 8.4% climb year-to-date and an impressive 5-year return of 55.9%, there’s evidence of resilience, even if the 1-year slide of 0.7% raises a few eyebrows.

What’s fueling these moves? For one thing, recent shifts in consumer trends and evolving global market dynamics have kept investors on their toes. Growing demand for non-alcoholic beverages in emerging economies and Coca-Cola’s ongoing product innovations are nudging the company forward, managing to keep the brand front and center even as broader sector risks hover in the background.

But here’s the big question: is Coca-Cola stock undervalued or is the price already baked in? According to our six-point valuation scorecard, Coca-Cola scores a 4, meaning it’s undervalued in four out of six key checks, putting it in an interesting spot for further scrutiny.

Let’s break down how Coca-Cola stacks up on each major valuation method and, even better, explore a more holistic approach that could give you the clearest answer yet.

Coca-Cola delivered -0.7% 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 intrinsic value by projecting future cash flows and discounting them back to today's dollars. This approach helps investors determine what a business is truly worth based on the money it is expected to generate over time.

For Coca-Cola, the latest twelve months' Free Cash Flow (FCF) reflects a small outflow of approximately $634 Million. However, looking ahead, analysts project a healthy rebound, with forecasts for 2027 calling for FCF of about $13.39 Billion. Extended projections, which blend analyst opinions for the next five years with extrapolations beyond 2027, show steady cash flow growth over the coming decade in $USD.

Using these figures and applying the 2 Stage Free Cash Flow to Equity model, the DCF analysis calculates an intrinsic value per share of $93.40. With the DCF model indicating shares are trading at a 28.2% discount to this fair value, Coca-Cola appears to be undervalued according to this method.

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 28.2%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Coca-Cola Price vs Earnings (P/E Ratio)

For profitable companies like Coca-Cola, the Price-to-Earnings (P/E) ratio is a widely used method to value the stock. The P/E shows how much investors are willing to pay today for a dollar of the company’s earnings. This approach is especially effective for established, consistently profitable firms where the bottom line serves as a reliable benchmark.

What is considered a “fair” P/E ratio can change depending on factors such as expected earnings growth and the risks associated with a company or its sector. High-growth, lower-risk companies usually have higher P/E ratios, while slower-growing, riskier businesses tend to trade at lower levels.

Coca-Cola currently trades at a P/E of 23.7x. By comparison, the average beverage industry stock trades at 17.9x, while Coca-Cola’s key peers average an even higher 26.7x. This places Coca-Cola between the broader industry and its direct competitors in terms of valuation multiple.

Simply Wall St’s proprietary “Fair Ratio” goes further by considering not just earnings growth and risk, but also Coca-Cola’s margin strength, market cap, and the industry environment. This more detailed analysis sets Coca-Cola’s Fair P/E at 24.4x, intended to show what would be reasonable if all these factors were in perfect balance.

Since the company’s actual P/E ratio (23.7x) is less than 0.1 away from its Fair Ratio (24.4x), the stock is considered to be trading close to where it should be based on earnings expectations and fundamentals.

Result: ABOUT RIGHT

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Upgrade Your Decision Making: Choose your Coca-Cola Narrative

Earlier, we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your story about a company, attaching your personal reasoning and future expectations, such as what you believe Coca-Cola’s fair value, growth, and margins should be, to the numbers.

In practice, Narratives blend the company’s unique journey with your own forecasts, automatically converting them into a fair value so you can see how your beliefs compare to the market price. Narratives are not just for experts, either. They are designed to be intuitive and are available to everyone in the Simply Wall St Community, where millions of investors share their perspectives.

This approach lets you see, at a glance, whether Coca-Cola is undervalued or overvalued based on your view versus its actual share price. They will update dynamically any time news, results, or key fundamentals change.

For example, one user’s Narrative, factoring in rising margins and continued product expansion, pegs Coca-Cola’s fair value at $77.79 per share (a bullish outlook). A more cautious Narrative, weighing regulatory and growth risks, estimates fair value at $67.50. This is a reminder that your investment decision should always reflect your own story and expectations.

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.

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