It has been about a month since the last earnings report for Coca-Cola (KO). Shares have added about 1.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Coca-Cola due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers.
Coca-Cola Q2 Earnings & Sales Beat Estimates on Volume Growth
Coca-Cola reported second-quarter 2026 results, with the top and bottom lines surpassing the Zacks Consensus Estimate. The company’s revenues and earnings per share (EPS) improved year over year. The results have benefited from continued business momentum, aided by enhanced pricing across markets. This quarter’s results highlighted the strength of KO’s resilient, all-weather strategy.
Coca-Cola has reported a comparable EPS of 97 cents in the second quarter, up 11% from the year-ago period. Comparable EPS also beat the Zacks Consensus Estimate of 92 cents by 5.4%. Favorable currency translations aided the comparable EPS by two percentage points. Comparable currency-neutral EPS rose 9% year over year.
Revenues of $13.38 billion grew 7% year over year and beat the Zacks Consensus Estimate of $13.06 billion by 2.5%. The upside reflected broad-based demand, with global unit case volume up 5%. Organic revenues increased 6%, supported by a 4% rise in concentrate sales and 2% growth in price/mix. In the second quarter of 2026, the company also gained value share in total non-alcoholic ready-to-drink beverages.
KO's Volume & Pricing Momentum
In the reported quarter, trademark Coca-Cola volume increased 5% across all geographic operating segments. Coca-Cola Zero Sugar advanced 16%, while Diet Coke/Coca-Cola Light rose 7%. Sparkling flavors grew 4%, led primarily by the Asia Pacific.
Juice, value-added dairy and plant-based beverages increased 2%. Water, sports, coffee and tea volume rose 6%, including 6% growth in water and 5% growth in sports drinks. Coffee declined 2%, while tea advanced 6%.
KO's Regional Revenue Picture
North America revenues increased 7%, with organic revenues also up 7%. Unit case volume grew 3% and price/mix advanced 4%, while comparable currency-neutral operating income climbed 12% on organic growth and lower operating expenses.
Latin America revenues jumped 16%, aided by an 11% currency benefit, while organic revenues rose 5%. EMEA revenues increased 2% and organic revenues grew 3%. The Asia Pacific revenues inched up 1% as 11% concentrate-sales growth was largely offset by a 9% decline in price/mix. Bottling Investments revenues rose 8%.
Regional profit trends were mixed. Comparable currency-neutral operating income increased 75% in Bottling Investments and 4% in Latin America, but declined 5% in EMEA. The Asia Pacific was flat on this basis as organic growth and lower operating expenses were offset by higher input costs and increased marketing investments.
Analyzing Coca-Cola’s Q2 Margins
In dollar terms, the operating income rose 9% year over year to $4.67 billion. The reported operating margin widened 77 basis points (bps) to 34.9%, while the comparable operating margin expanded 86 basis points to 35.6%.
Comparable currency-neutral operating income rose 6%. Organic revenue growth, lower operating expenses and currency tailwinds supported profitability, partly offset by higher input costs and increased marketing investments. The comparable gross margin improved to 63.4% from 62.2% a year earlier.
KO Raises Its 2026 Outlook
For 2026, Coca-Cola expects 2026 organic revenue growth of 5% compared with its prior forecast of 4-5%. Comparable currency-neutral earnings, excluding acquisitions and divestitures, are projected to rise 7-8%, up from 6-7%. Comparable earnings are expected to grow 9-10% from the 2025 base of $3 versus the previous outlook of 8-9% growth. The forecast includes a 3% currency tailwind and about a 1% headwind from acquisitions and divestitures.
Management envisions an adjusted free cash flow of $12.4 billion for 2026, including $14.6 billion in cash flow from operations. Capital expenditure is still likely to be $2.2 billion.
For the third quarter of 2026, Coca-Cola expects comparable net revenues to include a 1% currency tailwind and a roughly 1% headwind from acquisitions and divestitures. Comparable earnings are projected to receive a 3% currency benefit, with minimal pressure from portfolio changes.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Coca-Cola has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Coca-Cola has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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CocaCola Company (The) (KO): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).