Coca-Cola Isn't a Value Stock Anymore | KO Stock Analysis 2026

Today, Coca-Cola stock hit its all-time high in stock price after reporting earnings. The stock is now up 27% year-to date. This is part of a broader market rotation into value stocks this week. Companies like Sherwin Williams, Asenture, Coca-Cola, Automatic Data Processing, Philip Morris, the Altria Group. This boring reliable stuff is up big on the day. And I have been noticing this trend more broadly of how quickly the market will rotate between sectors. Yesterday I showed you the money moving out of the AI related hardware and semiconductor stocks companies like SanDisk Dell Micron applied materials, AMD. This selloff has continued into today. A lot of that money has been moving into software stocks, companies that have been sold off massively and beaten down into very attractive valuations. This trend continues today and you can see that rotation when we dive into the specific industry. You can see that software application companies, those are up 4.82%. Even software infrastructure kind of companies are up on the day. However, you're seeing a continued sell off in computer hardware, hardware equipment, and in specific parts of semiconductors and basically everything but Nvidia is down on the day. Today, you're seeing the stock market rotation flow into more what's considered traditional value stocks, specifically the consumer defensive companies like Coca-Cola as an example. However, the ironic part is that many of these more traditional value stocks are not actually a good value. Let me explain. Coca-Cola stock reported earnings this morning and they beat expectations on both earnings per share and revenue. And on top of that earnings beat, they raised guidance as well. The market has since rallied and now the stock sits at an all-time high and the stock has quietly ripped 27% year to date. That is outperforming the broader market. And yes, the business has been doing great, but the price action is currently ahead of the fundamentals. And Coca-Cola is actually the most expensive today that it has ever been over the past 5 years. But yet, the market when they rotate into value stocks, Coca-Cola is still one of the companies they go to. In today's video, I'm going to do an updated stock analysis on Coca-Cola stock, ticker symbol KO. One of the best businesses in the history of the world, an extremely dominant company, one of Warren Buffett's favorite stocks, and the maker of some of my favorite beverages. I'll explain why the company is trading at all-time highs in stock price, while peers like PepsiCo, which I covered recently, are trading at a significant discount relative to Coca-Cola's valuation. In fact, this is one of the largest gaps between the two companies that I have ever seen. On top of that, I'll provide some other examples of quote value stocks that I don't necessarily think are a good value right now. With that said, let's roll the intro and get into today's video. [music] >> [music] >> The following reflects the opinions of a man who spends far too much time thinking about stocks. Please do your own research before making any investment decisions. Nothing in this video is personal financial advice. Continue at your own risk. >> My name is Zach. This is Dividend Data. You should leave a like and subscribe to the channel if you enjoy the video. Today, I'm going to be using the next generation version of dividenda.com, which just launched recently. So, click link in the description and pin comments so you can follow along throughout the video and use the same tools to research that I do. You can also scan that QR code in the bottom right. I'd also like to mention that we have a founding member deal where you can get 50% off annual membership and lock in that discount price for life. You can find the link below. If the tool helps you find just one better stock, then it way more than pays for itself. With that said, let's get right into it. The key story, Coca-Cola hitting all-time highs. If you aren't aware of Coca-Cola, it's one of the best businesses in the history of the world. As you can see, since 1985, their stock price is up 6,755%. That's a 10.71% compound annual growth rate. But Coca-Cola is what you would call a dividend king. They have been raising their dividend payment on an annual basis for decades. So, in the history of the company, the total return is actually far better than the price would lead you to believe. Since 1985, the total return for Coca-Cola is 17,343%. That's a 13.22% compound annual growth rate. And this goes to show the power of long-term compounding and reinvesting earned dividends. And it's these high cash flow companies that reward shareholders which drive a huge part of the overall market returns. Some of them may seem boring, but cash flow is cash flow. And if you have that money to pay dividends and buy back stock, that really starts to compound over the long run. And as we sit here today with Coca-Cola at all-time highs, I remain as confident in the actual core business as ever. Now, you obviously probably know Coca-Cola the soda, but this is a diversified beverage company which owns many top brands in different categories. Whether it's things like body armor, Dani Fairlife Fresca Fanta Minuteade Powerade Sprite Smartwater Vitamin Water, Topo Chico. But it is the core CocaCola brand which still drives the business and is the reason why the stock price is hitting all-time highs today. It's the cash cow. It's the money maker and it's the best brand which they are expanding into different categories which is really fueling a lot of organic growth at the company or at least relative to some other consumer staple companies cuz this still isn't a high-flying tech giant by any means. And what I'm talking about with these expansions is expansions of the Coca-Cola brand into different categories. as an example, Diet Coke. They did that decades ago, and it's a huge hit. And that's expanded again over the past decade or so into Coke Zero, and that is also growing pretty well. And as we dive into Coca-Cola's latest earnings, this is part of the story. The fact that their best, largest, most profitable brand, Coca-Cola, it's doing well. Their trademark Coca-Cola grew 5% year-over-year. This is volume growth. Coca-Cola Zero Sugar grew 16% year-over-year. and Diet Coke grew 7%. And overall, this was as good of a quarter as you could expect from Coca-Cola. They had an earnings beat, 97 cents a share, up 11% year-over-year. Overall unit volume grew 5% and they raised their fullear guidance. They're expecting 7 to 8% EPS growth in the coming year compared to guidance of 6 to 7% and they're expecting organic revenue growth of 5%. They also raised guidance on their free cash flow to 12.4 billion. So, Coca-Cola, it's a quality business that's doing well. And let's dive specifically into those financials, how it impacts their dividend, and then why I'm saying that even though Coca-Cola is doing great, and it did just hit its all-time high, it's not actually a good value right now. So, let's start with their earnings per share. So, they did just report 97 cents in the latest quarter, which is up 11.49% year-over-year. That's high quality growth. Over the trailing 12 months in their earnings per share, they reported $329, which is up 10.62% year-over-year. So, this is actually accelerating earnings growth at Coca-Cola. As you can see, over the past 5 years earnings per share, it's up 37.45% overall, which is a 6.93% compound annual growth rate. And again, this is accelerating because over the past 10 years, the keer was 5.48%. As we zoom out to the all-time view, you can see that Coca-Cola for a while is stagnating, but now we're just starting to see some consistent growth. And I think that's a big reason why you're seeing the stock start to trade at more of a premium valuation again. But what really matters is whether the company continues growing in the future. Right now, analysts are projecting 9% growth in fiscal 2026. That gives it a forward PE ratio of 26.8. And then analysts are expecting mid-s singledigits earnings per share growth every year thereafter. So, it's not growing fast. And 26.8, especially relative to many stocks in the market, that's on the expensive side. You're seeing many big tech giants that are growing far faster trade at a similar valuation. And if we look at Coca-Cola's forward-looking earnings and compare it to the daily PE ratio over the past 5 years based on its forward PE, this is actually the most expensive point ever for Coca-Cola stock. It's in the 100th percentile. And if we look at over the past 10 years, it's still very expensive. Revenue growth is starting to look better at Coca-Cola. $50.13 billion over the trailing 12 months, up 6.52% year-over-year. And this starts going into again what's so great about Coca-Cola's business. It's a very high margin business in its space. 61% gross margins, 27.3% net margins. And a lot of that is coming from their core Coca-Cola product where it's the concentrates that they sell. super high margin. And this is the money printer that's been generating billions of annual free cash flow for decades. And after this quarter, Coca-Cola just hit an all-time high in free cash flow. You can see they had 5.1 billion in the quarter, which was a 51% year-over-year improvement. And over the trailing 12 months, they generated $14.3 billion in free cash flow. Likewise, operating cash flow hit an all-time high over the trailing 12 months of $16.3 billion. And this goes to show some of the growth happening at the company and it matters a lot to the dividend investors who rely on the Coca-Cola dividend payments and hopefully future dividend increases. And again, as I showed at the beginning of the video, the dividend is a huge part of the long-term compounding as an investor in Coca-Cola. And the dividend growth has been kind of slow lately. Over the past 5 years, the compound annual growth rate is 4.76%. And over the past 10 years, it's 4.24%. The most recent dividend increase was 3.92%. So it is an interesting question of whether this next increase will be higher. And this leads to another way in where Coca-Cola stock looks expensive right now. The dividend growth has not nearly been keeping up with the recent stock price performance. And the forward-looking dividend yield of 2.52% for Coca-Cola is the most expensive it has been over the past 5 years. As you can see, the highest in this period was 3.51%. And the median dividend yield in this time period is 2.93%. So, we're still well below that. In fact, based on dividend yield, this is the most expensive the stock has been over the past decade and one of the lowest since the great financial crisis. Only in 2007 was the stock more expensive. So, if you're a dividend growth investor owning Coca-Cola, you want the dividend growth to start accelerating. And with the recent improvement in free cash flow, this is possible. In 2024 and 2025, Coca-Cola's dividend based on free cash flow payout ratio looked unsustainable. Their dividend payment was higher than their annual free cash flow in those years by a good bit. In 2025, it was a 165% free cash flow payout ratio. However, based on GAF earnings per share in that time, it was sustainable with a 67% payout ratio. However, this improvement in annual free cash flow will make the dividend payment appear more sustainable again. In fiscal 2025, the company paid out $ 8.78 billion of dividends. So, you can see they're generating actually a lot more cash than they're paying out in dividends, and the business is getting in a more sustainable place. So, the Coca-Cola business is doing well, but is it actually a good buy at this current price? I'm going to be using this tool called the value graph over on dividend.com and it maps out all of the core metrics of the company looking at its multiple over time on all of those core metrics. And it gives you an idea of whether it's trading in an expensive range or potentially in a cheap range. And as we can see with Coca-Cola right here, if we're looking at it based on earnings per share, this would be GAP EPS. The company's trading right about fair value with the median multiple being 26.15 in this time. If we look at it based on dividend though, as I was mentioning, the dividend was not keeping up, the median yield over the past 5 years is 2.89%. So you can see we're at a very expensive point relative to the implied fair value in this case meaning the median dividend yield for the stock. You can see that fair value grows over time though as the dividend grows. You can see that if we look at the operating cash flow for Coca-Cola. This also shows it's around fair value right now. And that's because the actual operating cash flow has grown. The fair value has grown of the company. When that dividend was showing to be unsustainable, the operating cash flow has dropped and free cash flow was even negative briefly. So based on the cash flow of Coca-Cola, I would say it's fair value to slightly on the expensive side. Definitely based on the dividends that the company is paying you, it looks to be more expensive than it has been historically. So if you're a dividend investor, you need the dividend growth to start catching up. And that could happen if their cash flow improvements continue. And I really bring this up to say that just because something's called a value stock, it doesn't always mean that it's trading at a good value right now. Now, I mentioned earlier in the video that I covered PepsiCo a few videos ago. And there's an interesting development happening where Coca-Cola is trading at a much higher multiple than PepsiCo is. And the gap is widening. As you can see based on dividend yield right now, the current dividend yield for PepsiCo stock is 4.04%. 04% and the median yield over the past 5 years is 2.93%. So you can buy PepsiCo stock at a discount relative to its implied fair value. The same is true for free cash flow, operating cash flow, and earnings per share at PepsiCo. While Coca-Cola is trading at one of its more expensive P ratios over the past 5 years, PepsiCo is trading at one of its lowest over the past 5 years with a forward P ratio of 16.6 while Coca-Cola was sitting at 26. So this gap between the two is a very interesting trend to follow. And before I wrap up the video, I want to mention another value stock that has been going up recently and it basically has been following that trend of whenever there's a AI or growth selloff and the market moves into value. This stock has been doing very well on the year. I own it. It's the Altria Group, ticker symbol MO. They are also a big high yield dividend payer and they've been growing that dividend for a long time. They're up 3% on the day and year to date it's up 30.76%. However, I don't actually think it's a good value at today's price despite it doing well in the market. If we look at it relative to its dividend, which is a big part of the total return at Altria, it's actually one of the most expensive points over the past 5 years considering the median multiple trades at is at a 7.65% dividend yield. It's currently 5.65%. And if we look at it based on free cash flow generation with the median multiple at 10.43, it is currently on the more expensive side trading at a 14.5 free cash flow multiple. And when I covered the software stocks that looked like value stocks last video, a lot of those companies, their core fundamentals are growing faster than these consumer staples, whether it's the Altria Group, PepsiCo, or Coca-Cola. So you should go watch that video if you want to see my thoughts on that side of the stock market rotation. With that said, if you enjoyed today's video, make sure to leave a like, comment, and subscribe to the channel. And check out dividenda.com if you want to use the same exact stock research tools I do. You can get 50% off annual membership. Link in the description and pin comment. And with that said, thanks for watching and I'll see you in the next