Key Stats
- Current price: ~$78
- Q1 2026 revenue: $12.5B, up 11% YoY
- Q1 2026 comparable EPS: $0.86, up 18% YoY
- Organic revenue growth: 10% in Q1
- Full-year organic revenue guidance: 4% to 5%
- Full-year comparable EPS guidance: up 8% to 9% vs. $3.00 in 2025 (raised from 7% to 8%)
- TIKR model price target: ~$102
- Implied upside: ~30%
Coca-Cola Stock Delivers a Strong Q1 Earnings Breakdown
Coca-Cola stock (KO) opened Q1 2026 with comparable EPS of $0.86, up 18% from $0.73 in the prior-year quarter, on revenue of $12.5B, an 11% YoY increase from $11.2B.
Organic revenue grew 10%, with unit case volume up 3% across all operating segments.
The 3% volume growth was broad-based: North America posted 4% volume growth, Latin America grew despite Mexico’s new sugar tax, and Asia Pacific expanded volume across all operating units despite cycling a strong prior-year comparison.
Price/mix came in at 2%, driven by roughly 4 points of pricing actions offset by 2 points of unfavorable mix tied to Easter timing, category mix in North America, and geographic mix effects in Latin America.
According to CFO John Murphy on the Q1 2026 earnings call, 5 of the 6 additional calendar days in the quarter flowed through as concentrate shipments that ran ahead of unit case sales, adding roughly 5 points to the concentrate sales figure.
North America volume growth benefited from broad strength across trademark Coca-Cola, Fanta, FRESCA, BODYARMOR, POWERADE, DASANI, smartwater, and Minute Maid.
Asia Pacific delivered volume growth across all operating units but posted a profit decline, driven by commodity pressures in tea and coffee and a one-time phasing of juice inventory costs in China that Murphy described as unique to Q1.
Comparable gross margin declined roughly 30 basis points, reflecting those commodity and inventory cost headwinds.
Comparable operating margin expanded approximately 70 basis points as the company captured operating expense efficiencies while increasing brand investment.
Coca-Cola raised its full-year comparable EPS guidance to 8% to 9% growth versus $3.00 in 2025, up from the prior range of 7% to 8%, driven by a 1-point reduction in the expected underlying effective tax rate to 19.9%.
Full-year organic revenue guidance was reaffirmed at 4% to 5%, with divestitures expected to create a roughly 4-point headwind to comparable net revenues.
Management noted that the pending sale of Coca-Cola Beverages Africa, expected to close in the second half of 2026, will mechanically improve the company’s consolidated margin profile once complete.
Coca-Cola Stock Financials: Operating Leverage Emerging Against a Gross Margin Headwind
The Q1 2026 income statement shows operating leverage taking hold at the lower P&L while gross margin absorbs a commodity-driven squeeze, a pattern the full-year trajectory will need to resolve.
Gross margin reached 63% in Q1 2026, up from 63% in Q1 2025, though the comparable gross margin figure disclosed by management showed an approximate 30-basis-point decline on a comparable basis, reflecting tea, coffee, and China inventory cost headwinds.
Over the trailing eight quarters, gross margin ranged from 60% to 63%, settling at 62% to 63% across the stronger seasonal periods.
Operating income came in at $4.4B in Q1 2026, up 17% from $3.7B in Q1 2025, with operating margin expanding to 35% from 34% a year earlier.
The operating margin trajectory across the past eight quarters shows a clear seasonal pattern: margins peaked at 35% in Q1 2025, compressed to 25% in Q4 2025, and recovered back to 35% in Q1 2026.
According to Murphy on the Q1 2026 earnings call, roughly two-thirds of the margin compression in Q1 was attributable to the one-time China inventory item, with underlying structural headwinds in APAC expected to improve over the course of the year.
Murphy also flagged that the CCBA divestiture will function as a mechanical margin tailwind in the second half of 2026, removing a lower-margin bottling operation from the consolidated P&L.
What Does the Valuation Model Say?
TIKR’s model prices Coca-Cola stock at ~$102, implying roughly 30% total return potential from the current price near $78 over approximately 4.7 years.
The mid-case assumptions are conservative: 2.8% revenue CAGR through 2035, with net income margin expanding from the current 27% historical level to 30%, reflecting continued operating efficiency and the portfolio simplification underway.
The Q1 2026 results modestly strengthen the investment case: the EPS guidance raise, volume growth across all segments, and operating margin expansion at the group level all support the margin expansion trajectory embedded in the model.
The core risk is that the model’s 30% net income margin assumption requires the commodity headwinds in tea and coffee and the APAC structural margin drag to resolve as management indicated, and the macro environment does not deteriorate further.
On balance, the Q1 print keeps the TIKR valuation thesis intact. Coca-Cola stock is priced at a meaningful discount to the mid-case fair value, and the earnings report adds incremental confidence rather than raising new concerns.
The tension this report creates: Coca-Cola delivered volume growth and raised EPS guidance, but the path to margin expansion depends on commodity resolution and a divestiture that hasn’t closed yet.
What Has to Go Right
- Tea and coffee commodity pressures remain “manageable” per Murphy on the Q1 call, and the China inventory one-off does not recur in Q2 through Q4
- Coca-Cola Beverages Africa closes in H2 2026 as expected, mechanically lifting consolidated margin and validating the 30% net income margin assumption in the TIKR model
- North America volume momentum continues into the FIFA World Cup activation in Q2, where KO holds connected packaging activations across the U.S. and Mexico markets
- The balanced algorithm of roughly 3% volume and 2% price/mix holds through the year, keeping organic revenue growth within the 4% to 5% full-year guidance range
What Could Still Go Wrong
- Geopolitical tensions Murphy flagged on the Q1 call could shift commodity costs beyond the “manageable” range and pressure bottler economics in aluminum and PET-intensive markets
- APAC operating profit declined in Q1 with operating margins under pressure from both the China one-off and the structural Japan-versus-developing-markets geographic mix headwind, creating execution risk for the back half
- Volume in Eurasia and the Middle East turned negative in March after the onset of the conflict, adding a geographic segment that could weigh on Q2 volume growth when the Easter tailwind and calendar benefit no longer apply
- Mexico volume faces continued drag from the new sugar tax introduced at the start of 2026, with LatAm price/mix already running negative 6 points in Q1 due to geographic mix and affordability investments
Should You Invest in The Coca-Cola Company?
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