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- KO 3Q25 - Pop. Gaining share and EPS beat. What's next? Bull case $90. Bear case $60
KO 3Q25 - Pop. Gaining share and EPS beat. What's next? Bull case $90. Bear case $60
Cheat Sheets
COCA-COLA (KO)
🥤 Beverage Giant | EPS $0.82 (Beat) | Revenue $12.5B (+5%) | 18th Straight Quarter Share Gains
Volume +1% ↑ (Sept Strong) | Price/Mix +6% | Operating Margin 32% | 30 Billion-$ Brands | Reaffirmed 2025 Guidance
💰 Market Cap: $295B | 🏢 69.7k Employees | 🌐 200+ Countries
👨💼 CEO James Quincey | 🎯 200+ Brands | 🇺🇸 Atlanta, GA
$71.08
📈 +$2.64 (+3.9%) Today
+17% YTD | -4% from 52-wk High
Price Targets (12-18 Months)
Current Price: $71.08
$90.00
Bull Case (+27%)
Premium Multiple
🚀 Needs:
Volume hits +3% • China/India wake up • Zero Sugar crushes 20% mix • Dollar weakens • Fairlife goes nuclear • Premium wins
$82.00
Base Case (+15%)
Steady State
⚖️ Needs:
Status quo continues • 5-6% organic growth • Volume stays +1% • Margins hold 32%+ • FX stabilizes • Consumer hangs in
$60.00
Bear Case (-16%)
Multiple Compression
⚠️ Risk:
Volume goes negative • GLP-1 kills soda demand • Pricing power cracks • FX disaster • China stays dead • Valuation rerates down hard
The TL;DR
💰 What Happened
• Q3 EPS: $0.82 BEAT (est $0.78) - +6% despite 6% FX drag
• Revenue: $12.5B, up 5% (+6% organic)
• Volume: +1% (July/Aug dead, Sept came alive)
• Price/Mix: +6% = ALL the growth coming from pricing
• 18 straight quarters destroying competition
• 2025 Guidance: Kept it (5-6% organic, ~3% EPS upper end)
• North America: Flat but 2nd straight quarter getting better
• Revenue: $12.5B, up 5% (+6% organic)
• Volume: +1% (July/Aug dead, Sept came alive)
• Price/Mix: +6% = ALL the growth coming from pricing
• 18 straight quarters destroying competition
• 2025 Guidance: Kept it (5-6% organic, ~3% EPS upper end)
• North America: Flat but 2nd straight quarter getting better
✅ Bull Case
• 18 straight quarters dominating = market share beast
• Zero Sugar +14% = margin gold mine
• 30 billion-dollar brands = 2x next competitor (unbeatable)
• Margins exploded 1100 bps to 32% = money printer
• North America turning corner (2 quarters improving)
• India + Africa refranchising = growth unlocked
• Marketing transformation = digital dominance
• Zero Sugar +14% = margin gold mine
• 30 billion-dollar brands = 2x next competitor (unbeatable)
• Margins exploded 1100 bps to 32% = money printer
• North America turning corner (2 quarters improving)
• India + Africa refranchising = growth unlocked
• Marketing transformation = digital dominance
❌ Bear Case
• Volume barely alive at +1% (July/Aug sucked)
• CEO admitted: "Bottom end under pressure" = broke consumers
• Asia-Pacific tanking (soft spending, bad weather)
• Latin America dead flat (Mexico going south)
• Europe falling (same broke consumer problem)
• 6% FX headwind = dollars evaporating
• "Certain segments under pressure" = trouble brewing
• CEO admitted: "Bottom end under pressure" = broke consumers
• Asia-Pacific tanking (soft spending, bad weather)
• Latin America dead flat (Mexico going south)
• Europe falling (same broke consumer problem)
• 6% FX headwind = dollars evaporating
• "Certain segments under pressure" = trouble brewing
⚠️ Bottom Line
At $71.08 (+3.9% pop), KO crushed earnings but volumes are weak. 18 quarters of dominance + margin explosion = execution beasts. BUT CEO warned "bottom end under pressure" globally. Pricing power (+6%) carrying the load while volumes limp (+1%). India/Africa refranchising = long-term win. Quality name but not screaming cheap. Fair play $72-82.
🚀 Bull Thesis
👑
30 Billion-Dollar Brands = Unstoppable
Scale: 30 brands doing $1B+ each = NOBODY comes close
CEO Quote: "2x our nearest competitor" - they're not even in the same league
Moat: Portfolio this deep takes decades to build. Good luck replicating it
Brands: Coke, Sprite, Fanta, Dasani, Smartwater, Powerade + 24 more billion-dollar names
Growing: More billion-dollar brands coming as they develop "love brands"
CEO Quote: "2x our nearest competitor" - they're not even in the same league
Moat: Portfolio this deep takes decades to build. Good luck replicating it
Brands: Coke, Sprite, Fanta, Dasani, Smartwater, Powerade + 24 more billion-dollar names
Growing: More billion-dollar brands coming as they develop "love brands"
💎
Innovation Machine Firing
Zero Sugar: Coke Zero +14%, Diet Coke crushing it with younger crowd
New Drops: Sprite Plus Tea (NA), Bacardi x Coke (Mexico/Europe), Powerade Spring Box (Africa), Retro Diet Coke flavors
Q3 Results: "Innovation contributed strongly to revenue growth" + "strong velocities" = it's working
Marketing Hits: Fanta x Halloween (50 markets), Premier League everywhere (Coke/smartwater/Powerade)
Strategy: Going digital, getting personal, staying culturally relevant = winning formula
New Drops: Sprite Plus Tea (NA), Bacardi x Coke (Mexico/Europe), Powerade Spring Box (Africa), Retro Diet Coke flavors
Q3 Results: "Innovation contributed strongly to revenue growth" + "strong velocities" = it's working
Marketing Hits: Fanta x Halloween (50 markets), Premier League everywhere (Coke/smartwater/Powerade)
Strategy: Going digital, getting personal, staying culturally relevant = winning formula
📈
Margins Going Nuclear
Q3 Explosion: Operating margin 32% vs 21% last year = 1100 bps jump. Insane.
How: Pricing power + better mix + cost cuts + smarter execution = printing money
Sustainable: This isn't one-time. They restructured how they operate = permanent gains
Leverage: High fixed costs = every extra dollar of revenue drops HARD to bottom line
Forward: Company guiding MORE margin expansion into 2026. Not stopping.
How: Pricing power + better mix + cost cuts + smarter execution = printing money
Sustainable: This isn't one-time. They restructured how they operate = permanent gains
Leverage: High fixed costs = every extra dollar of revenue drops HARD to bottom line
Forward: Company guiding MORE margin expansion into 2026. Not stopping.
🌍
Refranchising = Big Brain Move
India Deal: Dumped 40% of bottler to Jubilant Bhatia (July) - local experts take the wheel
Africa Deal: HBC buying CCBA (closing 2026) - proven operators in Nigeria/Egypt running it
Strategy: Get OUT of bottling operations, focus on brands + innovation = way smarter use of capital
Partner Picks: CEO chose partners with "skill and will" - capability + cash to grow it right
Result: "Clear line of sight to complete refranchising" = transformation almost done
Africa Deal: HBC buying CCBA (closing 2026) - proven operators in Nigeria/Egypt running it
Strategy: Get OUT of bottling operations, focus on brands + innovation = way smarter use of capital
Partner Picks: CEO chose partners with "skill and will" - capability + cash to grow it right
Result: "Clear line of sight to complete refranchising" = transformation almost done
🐻 Bear Thesis
📉
Broke Consumers = Problem
CEO Warned: "Bottom end under pressure...cumulative impact of inflationary pressures" = people are tapped out
Volume Truth: Q3 +1% but "July/Aug slow to start" (dead), "September stronger" (maybe it was just hot)
North America: "Differences in spending between income groups" = rich buying, poor not = flat volumes
Global Same Story: "Top end has money...bottom end under pressure" in US AND Europe
Danger Zone: Value-seeking behavior = trading down on packages/channels = margin squeeze coming?
Volume Truth: Q3 +1% but "July/Aug slow to start" (dead), "September stronger" (maybe it was just hot)
North America: "Differences in spending between income groups" = rich buying, poor not = flat volumes
Global Same Story: "Top end has money...bottom end under pressure" in US AND Europe
Danger Zone: Value-seeking behavior = trading down on packages/channels = margin squeeze coming?
💱
International = Dumpster Fire
Asia-Pacific: Both units DOWN - "softer spending, weaker industry, bad weather" (India/Philippines got wrecked)
Latin America: Flat = dead money. Mexico "softening macro" = taking steps but "will take time" (aka trouble)
Europe: Volume DOWN - tough comps but real issue is "bottom end pressure, same as U.S." (consumers broke everywhere)
CEO Speak: "Dynamic environment" + "uncertain trade dynamics" + "geopolitical" = everything's a mess
Only Win: Eurasia/Middle East/Africa grew despite "volatile macroeconomic backdrops" (one bright spot)
Latin America: Flat = dead money. Mexico "softening macro" = taking steps but "will take time" (aka trouble)
Europe: Volume DOWN - tough comps but real issue is "bottom end pressure, same as U.S." (consumers broke everywhere)
CEO Speak: "Dynamic environment" + "uncertain trade dynamics" + "geopolitical" = everything's a mess
Only Win: Eurasia/Middle East/Africa grew despite "volatile macroeconomic backdrops" (one bright spot)
💊
FX = Silent Killer
Q3 Damage: 6% FX headwind to EPS - literally wiped out ALL operational gains
Full Year: 6-7% currency hit expected (3-4% on revenue) = brutal and getting worse
The Math: Strong dollar means emerging market profits turn into less dollars when they bring it home
Exposure: 2/3 of revenue = international = you're basically short the dollar when you own KO
Silver Lining: They grew +6% comparable EPS DESPITE 6% FX hit = operational beasts, but currency is pain
Full Year: 6-7% currency hit expected (3-4% on revenue) = brutal and getting worse
The Math: Strong dollar means emerging market profits turn into less dollars when they bring it home
Exposure: 2/3 of revenue = international = you're basically short the dollar when you own KO
Silver Lining: They grew +6% comparable EPS DESPITE 6% FX hit = operational beasts, but currency is pain
💰
Valuation = Not Cheap
Multiple: 25x forward earnings for 5-6% organic growth = you're paying for perfection
History: Trading ABOVE 20-year average P/E = expensive by its own standards
Comps: More expensive than PepsiCo, Monster, most CPG names = premium pricing
Risk: Any guidance miss = -10-15% drop as premium multiple gets destroyed
Math: Limited upside (slow growth + rich valuation) = asymmetric risk skews negative at these levels
History: Trading ABOVE 20-year average P/E = expensive by its own standards
Comps: More expensive than PepsiCo, Monster, most CPG names = premium pricing
Risk: Any guidance miss = -10-15% drop as premium multiple gets destroyed
Math: Limited upside (slow growth + rich valuation) = asymmetric risk skews negative at these levels
This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial advisor before making investment decisions.
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