Value
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.8 |
| P/S | 5.3 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 5.2 |
| PEG | 3.1 |
| Analyst target | 4.0 |
- ▸Forward P/E: 24.1x
- ▸PEG: 4.02
KO · Why this verdict
Why Coca-Cola Company (The) (KO) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.7/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
The business delivers on execution—four consecutive earnings beats, a wide economic moat, and margins that rank best-in-class—but at a forward P/E of 23.2x and a PEG of 4.14, the current price fully reflects those qualities, leaving almost no upside headroom, an unfavorable risk/reward geometry, and a free cash flow conversion rate that lags the headline earnings quality.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The last four quarters all beat consensus estimates, averaging a positive surprise of roughly 4.5%, a pattern that reflects reliable execution and pricing power in a defensive consumer category. Earnings | The beat streak should extend to at least six consecutive quarters with average surprises above 3% if execution discipline holds. | →Stable |
| CounterThe average 4.5% beat is modest, and a forward P/E of 23.2x already discounts continued delivery; a quarter where results merely meet—rather than beat—expectations could pressure the multiple even without a fundamental deterioration. | ||
Sparkling soft drinks account for 69% of revenue, creating meaningful category concentration in a segment that faces long-term consumer preference headwinds toward health-oriented alternatives. Bear case | The concentration risk would begin to moderate if the sparkling segment falls below 60% of total revenue as non-sparkling categories grow over two consecutive annual reporting periods. | ↓Deteriorating |
| CounterThe dominant position in sparkling beverages itself provides pricing resilience and a global distribution network that competitors would struggle to replicate; scale within a single dominant category can be a source of durable profitability rather than a structural vulnerability. | ||
A wide economic moat supported by operating margins of 28% and a return on equity of 43% places the business in the top tier of the consumer defensive peer group; these characteristics have historically commanded a sustained valuation premium. Quality | Operating margins should remain above 25% and return on equity above 35% for two consecutive annual reporting periods if the moat is intact. | →Stable |
| CounterThe return on equity of 43% may be flattered by a buyback-reduced equity base rather than pure operational compounding; investors focusing on return on capital rather than equity would see a more modest picture, which could limit how much premium the ROE figure alone can justify. | ||
Despite strong accounting margins, free cash flow is converting at only 23% of net income—meaning the company is not translating reported profits into cash at a rate consistent with its stated earnings quality—a red flag for a franchise that commands a premium on the basis of durable cash generation. Quality | FCF-to-net-income ratio should recover above 60% for two consecutive reporting periods if the cash conversion gap is transitory. | →Stable |
| CounterA 23% FCF/NI ratio may reflect cyclical working capital timing or one-time items rather than a structural gap; in a globally diversified franchise business, near-term FCF dips have historically normalized without impairing long-term cash generation. | ||
At a forward P/E of 23.2x and a PEG of 4.14, the stock screens expensive versus the sector; with only about 1% headroom to the technical resistance level and the reward/risk geometry unfavorable, the margin of safety for new positions is thin. Value | The setup becomes more attractive if the forward P/E compresses below 18x—either through a price correction or an acceleration in earnings—over the next 12 months. | →Stable |
| CounterDefensive franchises with wide moats and consistent beat records command premium multiples precisely because they preserve capital in downturns; a rich multiple can persist for extended periods when the quality of earnings is demonstrably high and the business shows consistent repeatability. | ||
The last four quarters all beat consensus estimates, averaging a positive surprise of roughly 4.5%, a pattern that reflects reliable execution and pricing power in a defensive consumer category.
→StableEarnings
- Expectation
- The beat streak should extend to at least six consecutive quarters with average surprises above 3% if execution discipline holds.
CounterThe average 4.5% beat is modest, and a forward P/E of 23.2x already discounts continued delivery; a quarter where results merely meet—rather than beat—expectations could pressure the multiple even without a fundamental deterioration.
Sparkling soft drinks account for 69% of revenue, creating meaningful category concentration in a segment that faces long-term consumer preference headwinds toward health-oriented alternatives.
↓DeterioratingBear case
- Expectation
- The concentration risk would begin to moderate if the sparkling segment falls below 60% of total revenue as non-sparkling categories grow over two consecutive annual reporting periods.
CounterThe dominant position in sparkling beverages itself provides pricing resilience and a global distribution network that competitors would struggle to replicate; scale within a single dominant category can be a source of durable profitability rather than a structural vulnerability.
A wide economic moat supported by operating margins of 28% and a return on equity of 43% places the business in the top tier of the consumer defensive peer group; these characteristics have historically commanded a sustained valuation premium.
→StableQuality
- Expectation
- Operating margins should remain above 25% and return on equity above 35% for two consecutive annual reporting periods if the moat is intact.
CounterThe return on equity of 43% may be flattered by a buyback-reduced equity base rather than pure operational compounding; investors focusing on return on capital rather than equity would see a more modest picture, which could limit how much premium the ROE figure alone can justify.
Despite strong accounting margins, free cash flow is converting at only 23% of net income—meaning the company is not translating reported profits into cash at a rate consistent with its stated earnings quality—a red flag for a franchise that commands a premium on the basis of durable cash generation.
→StableQuality
- Expectation
- FCF-to-net-income ratio should recover above 60% for two consecutive reporting periods if the cash conversion gap is transitory.
CounterA 23% FCF/NI ratio may reflect cyclical working capital timing or one-time items rather than a structural gap; in a globally diversified franchise business, near-term FCF dips have historically normalized without impairing long-term cash generation.
At a forward P/E of 23.2x and a PEG of 4.14, the stock screens expensive versus the sector; with only about 1% headroom to the technical resistance level and the reward/risk geometry unfavorable, the margin of safety for new positions is thin.
→StableValue
- Expectation
- The setup becomes more attractive if the forward P/E compresses below 18x—either through a price correction or an acceleration in earnings—over the next 12 months.
CounterDefensive franchises with wide moats and consistent beat records command premium multiples precisely because they preserve capital in downturns; a rich multiple can persist for extended periods when the quality of earnings is demonstrably high and the business shows consistent repeatability.
Per-dimension breakdown
Quality
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 6.3 |
| Gross margin | 8.3 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 5.1 |
| FCF quality | 1.8 |
| Moat | 7.5 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 43%
- ▸Strong margins: 28%
- ▸Earnings quality RED FLAG: 23% FCF/NI
- ▸Wide economic moat
Growth
5.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.5 |
| EPS growth | 5.6 |
Momentum
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 1.3 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 4.7 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.8 |
| Analyst rating | 7.5 |
| Price target | 5.7 |
Insider
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Modest insider selling — $79,906,661 (0.022% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.1 |
| quality rank | 8.5 |
| growth rank | 6.9 |
- ▸Best-in-class margins
Technical
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.1 |
| support resistance | 3.3 |
| 52w position | 9.6 |
| gap | 5.0 |
Risk (lower is worse)
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.4 |
| days to cover | 8.5 |
| volatility | 7.5 |
| put call | 0.5 |
| implied vol | 3.9 |
| max pain risk | 3.0 |
| beta | 10.0 |
| debt equity | 4.5 |
- ▸Elevated put/call: 1.93
- ▸Above max pain $69
- ▸Concentration risks: 2 HIGH, 3 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 4.7 |
| dividend safety | 3.0 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 0 days
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Downgraded from BUY WAIT — price $84.07 has reached target $83.97. No upside to wait for.
Engine technical detail
verdict_path:
L3:NEWS_BLOCK|SANITY:WAIT+price>=TPPassed (6)
- MOMENTUM:6.1>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_BOOST:EARNINGS:0.70
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-1.1=NEGATIVE
- EARNINGS_PROXIMITY:0d<=7d
Warning (0)
none
Reward-to-Risk
-1.09
Upside
-5.5%
Downside
5.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
A recent news event triggered an L3 news-block on the verdict path. Trigger: Downgraded from BUY WAIT — price $84.07 has reached target $83.97. No upside to wait for. The 10-dimension scores remain Quality at 7.4 (strongest), but ASYMMETRY:-1.1=NEGATIVE also fails — the news block is the proximate trigger, not the sole driver.
The strongest dimensions are Quality at 7.4, Sentiment at 6.4, and Momentum at 6.1; the weakest are Value at 3.8, Technical at 5.0, and Peer rank at 5.1. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -1.09 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Consistent Earnings Beat Record
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Wide Moat Best In Class Margins
Trip ifOperating margin drops below 22% or return on equity falls below 30% for 2 consecutive annual reporting periods.
- P3Poor Free Cash Flow Conversion
Trip ifFCF-to-net-income ratio rises above 60% for 2 consecutive reporting periods.
- P4Rich Valuation Limits Upside
Trip ifForward P/E compresses below 18x for 2 consecutive quarters.
- P5Sparkling Category Concentration
Trip ifSparkling segment share of total revenue falls below 60% for 2 consecutive annual reporting periods.