At today's price, Coca-Cola's stock is pricing in about 13.3% annual free-cash-flow growth for the next ten years. Over the past five years, revenue grew 5.5% a year and operating income 7.5% a year — and even the company's own 2026 profit guidance tops out at just 5-6%.
At its current price, KO implies ~13.3% annual FCF growth for the next 10 years, discounted at 9% (using the company's own adjusted FCF figure).
Coca-Cola's actual 5-year revenue growth has averaged 5.5% a year, and operating income 7.5% a year.
Required growth vs. historical growth
Required growth from the reverse DCF below. Historical CAGRs from 10-K FY2021 and FY2025 income statements. 2026 EPS guidance from the Q4 FY2025 earnings call (CFO John Murphy, Feb 2026).
Sensitivity: what if the discount rate or FCF base moves?
| WACC | Required growth (adjusted FCF) | Required growth (GAAP FCF) |
|---|---|---|
| 8% | 10.82% | 20.83% |
| 9% (base case) | 13.31% | 23.62% |
| 10% | 15.58% | 26.17% |
| 12% | 19.71% | 30.80% |
Even at the lowest discount rate tested (8%), the required growth rate using adjusted FCF is 10.82% — still nearly double the 5.5% five-year revenue pace.
What would move this number
- The choice of FCF base changes the answer dramatically. Coca-Cola experienced two large one-time cash outflows in recent years — an IRS tax escrow deposit and a fairlife acquisition milestone payment. Using the company's own "adjusted FCF" ($11.4B in 2025, excluding those items) gives a required growth rate of 13.3%; using the raw GAAP cash flow statement figure ($5.3B) instead pushes the required rate to 23.6%. Either way, the market's expectation sits well above historical performance.
- Lowering the terminal growth rate from 2.5% to a more conservative 2.0% raises the required growth rate slightly.
- Share count and net debt figures used here are year-end 2025 — any 2026 buybacks or new borrowing could shift the current numbers modestly.
Show your work
Inputs, sources, model assumptions, and the calculation
- Share price$86.98 — stockanalysis.com, Aug 17, 2026 close
- Diluted shares outstanding4,313M — 10-K FY2025 income statement, "Average Shares Outstanding — Diluted"
- Market cap$375,145M — price × diluted shares (calculated)
- Total debt$45,492M — 10-K FY2025 balance sheet (year-end 2025)
- Cash + short-term investments$13,872M — 10-K FY2025 balance sheet
- Net debt$31,620M — calculated
- Enterprise value$406,765M — market cap + net debt
- Base FCF (adjusted, 2025)$11,400M — CFO John Murphy, Q4 FY2025 earnings call (Feb 2026): "free cash flow, excluding the fairlife contingent consideration payment, was $11.4 billion in 2025"
- Base FCF (GAAP, 2025)$5,296M — 10-K FY2025 cash flow statement: operating cash flow $7,408M minus capex $2,112M
- Discount rate (WACC)9% base case (8%/10%/12% tested)
- Terminal growth rate2.5% — long-run GDP-level assumption
Normalization note: the company itself has stated that 2024-2025 GAAP operating cash flow was distorted by one-time items (IRS tax escrow, fairlife acquisition milestone payment). This card uses the company's own officially disclosed "adjusted FCF" ($11.4B) as the base case, with the raw GAAP figure shown separately for comparison.
Model: free cash flow is assumed to grow at a constant annual rate g for 10 years, then at a 2.5% terminal rate thereafter, solved by bisection for the value of g that equates present value to today's enterprise value.
Historical CAGR: 5-year revenue CAGR = ($47,941M / $38,655M)^(1/4) − 1 = 5.53%. 5-year operating income CAGR = ($13,762M / $10,308M)^(1/4) − 1 = 7.49% (both 10-K FY2025 and FY2021 income statements, FY2021-FY2025).
The fine print
- Change the discount rate, the FCF base, the projection window, or the terminal growth rate, and the answer moves significantly — as the table above shows, the GAAP-FCF-based required rate nearly doubles the adjusted-FCF-based one.
- A reverse DCF shows what the market currently expects — it does not say what the stock is "worth."
- Whether 13.3% growth is realistic should be checked against recent results (Q2 FY2026's organic growth rebound), the new CEO's strategy, and dividend/buyback policy — not against this math alone.
- Any investment decision, and its outcome, is your own responsibility.
Frequently asked questions
What growth rate does KO's stock price assume?
At today's price, Coca-Cola's stock is pricing in about 13.3% annual free-cash-flow growth for the next ten years.
How does that compare to Coca-Cola's actual growth and guidance?
Over the past five years, revenue grew 5.5% a year and operating income 7.5% a year — and even Coca-Cola's own 2026 profit guidance tops out at just 5–6%, well below the ~13.3% the current price requires.
What share price was used for this analysis?
This analysis used $86.98, as of Aug 17, 2026.