ii view: Coca-Cola injects fizz into annual profit forecasts
Selling 200 drink brands globally and boasting an enviable dividend track record. Buy, sell, or hold?
22nd July 2025 15:32
by Keith Bowman from interactive investor
Second-quarter results to 27 June
- Revenue up 1% to $12.5 billion
- Adjusted earnings up 4% to $0.87 per share
- Quarterly dividend payment of $0.51 per share, unchanged from the previous quarter
Guidance:
- Now expects full-year adjusted earnings per share growth of 3%, improved from a previous 2-3%
Chief executive James Quincey said:
“Amid a shifting external landscape in the second quarter, the ability of our system to stay both focused and flexible enabled us to stay on course in the first half of the year.
“We continue to execute with a clear intent on our priorities and are confident in our trajectory to deliver on our updated 2025 guidance and longer-term objectives.”
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ii round-up:
Coca-Cola Co (NYSE:KO) today a flagged a decline in volumes but an increase in revenues, with the soft drinks giant improving its forecast for annual earnings growth.
Price increases helped counter a 1% fall in second-quarter volumes, driving a similar gain in revenues to $12.5 billion. Robust European demand countered weakness elsewhere, with a 4% increase in adjusted earnings year-over-year to $0.87 per share exceeding Wall Street hopes of $0.83 per share.
Shares in the Dow Jones company fell 1% in US trading having come into these latest results up by around 13% so far in 2025. The Dow Jones index is up 4% year-to-date. Rival PepsiCo Inc (NASDAQ:PEP) is down 7%.
Coca-Cola sells numerous brands including Fanta, Sprite and Costa Coffee in more than 200 countries and territories around the world.
Management now expects growth in annual adjusted earnings per share of 3%, up from a previous estimate of 2-3%.
The adjusted profit margin for this latest quarter rose to 34.7% from 32.8% in Q2 2024. The company pointed to a gain in its non-alcoholic ready-to-drink market share during the period.
A 3% rise in volumes for the Europe, Middle East & Africa (EMEA) region contrasted with falls of 1%, 2% and 3% for North America, Latin America and Asia Pacific respectively.
The Atlanta headquartered company previously declared a quarterly dividend of $0.51 per share, unchanged from the prior quarter and payable to eligible shareholders on 1 October.
Third-quarter results are likely to be announced mid-to-late October.
ii view:
Began in 1886, Coca-Cola today sells drinks across categories including carbonated soft drinks, water, sports, energy, juice, and coffee. North America remains the group’s biggest region, generating close to 40% of 2024 revenues, with EMEA next at around 17%. Of the group’s 200 brands, 30 currently generate annual sales of $1 billion or more, half of which the group grew from a starting position.
For investors, a fall in volumes across most of its geographical regions underlines a cautious consumer and an uncertain economic outlook. Geopolitical tensions previously caused the company to exit Russia. A share price-to-net asset value ratio above the three-year average may suggest the shares are not obviously cheap, while the sizeable proportion of sales generated overseas regularly sees it battling currency headwinds.
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On the upside, product and geographical diversity are high. Market share gains continue to be flagged. More than 10 brands have previously been acquired and then driven to generate annual sales of over $1 billion, while more than 30 years of consecutive annual dividend growth and a forecast yield of close to 3% underline a focus on shareholder returns.
In all, and while risks remain, a consensus analyst estimate of fair value above $77 per share is likely to see investors stick with this titan of the beverage world.
Positives:
- Brand strength
- Progressive dividend policy
Negatives:
- Heightened geopolitical tensions
- Currency volatility
The average rating of stock market analysts:
Buy
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