Coca-Cola Q2 Earnings & Sales Beat Estimates on Volume Growth

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. 

Our model predicted year-over-year organic revenue growth of 3.9% for the second quarter, with a 0.9% increase in the price/mix and a 3% rise in the concentrate sales volume.

Shares of Coca-Cola gained 4% in the pre-market trading session following the solid results in the second quarter. The Zacks Rank #3 (Hold) stock has risen 6.6% in the past three months compared with the industry’s 5.1% growth.

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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.

Our model predicted the second-quarter operating margin to expand 30 bps year over year to 35%, driven by flat gross margin and a 40-bps decline in the SG&A expense rate.

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.

Stocks to Consider

Fomento Economico Mexicano FMX is a leading Latin American beverage and retail company that operates Coca-Cola bottling businesses, OXXO convenience stores, health and beauty outlets, fuel stations and digital financial services across multiple countries. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. 

The Zacks Consensus Estimate for FMX’s current financial-year sales and earnings indicates growth of 17.3% and 131% from the prior-year reported level. FMX delivered a trailing four-quarter negative earnings surprise of 17%, on average.

The Vita Coco Company Inc. COCO develops, markets and distributes coconut water and other beverage products, led by the Vita Coco brand. The company currently carries a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for Vita Coco’s current financial-year sales and earnings is expected to rise 31.7% and 30%, respectively, from the year-ago reported figures. COCO delivered a trailing four-quarter earnings surprise of 21.9%, on average.

Primo Brands Corporation PRMB is a leading North American branded beverage company focused on healthy hydration. The company currently carries a Zacks Rank #2.

The Zacks Consensus Estimate for Primo Brands’ current financial-year sales indicates growth of 1.6% from the year-ago number. PRMB delivered an average earnings surprise of 1.4% in the trailing four quarters.

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This article originally published on Zacks Investment Research (zacks.com).

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