Key Points
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Coca-Cola stock ended at a record $95.83 on Nov. 2, up around 37% in 2026.
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Coca-Cola has lifted its 2026 earnings forecast by only about 3% since February.
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Shares trade at around 29 times this year’s expected earnings, more than at any of the past five year-ends.
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Coca-Cola (NYSE:KO) has made a habit of closing at record highs recently. Shares ended at an all-time high of $93.90 on Oct. 16, topped it at $95.34 on Oct. 22, and set another record of $95.83 on Nov. 2. Including those three, the stock has logged over two dozen record closes in 2026.
As I write, shares trade near $96, up about 37% this year from their 2025 closing price of $69.91. If that gain holds through December, it’d be the stock’s largest calendar-year rise since 1996, when shares climbed about 42%.
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When Coca-Cola posted third-quarter results on Oct. 27, I thought the stock had to drop closer to $80 before I’d buy it. Shares have added around 5% since that day’s close.
But the company hasn’t issued new results or a new forecast in the meantime. So the latest records came with no new fundamentals, and a higher price for the same earnings only makes me more wary.
Image source: Getty Images.
Earnings are rising, just not this fast
Granted, Coca-Cola’s earnings growth has sped up this year. Management now expects comparable earnings per share, its preferred non-GAAP (adjusted) profit measure, to rise at least 11% for 2026 from $3.00 for 2025.
That’s a clear step up. Showing how much faster this year is shaping up, comparable earnings per share rose between 7% and 8% yearly from 2022 through 2024. Then growth slowed to just 4% in 2025, dragged down by a 5-point currency headwind. This year, currency is helping instead, adding around 3 points to the expected growth rate.
But even a faster year doesn’t get close to the stock’s rise. In February, management called for comparable earnings-per-share growth of 7% to 8% for 2026, or around $3.21 to $3.24 a share. Growth of at least 11% now means at least $3.33.
So the company now expects only about 3% more earnings this year than it did in February. The stock, meanwhile, has risen about 25% since then.
Most of this year’s gain, then, has probably come from investors paying more for every dollar of Coca-Cola’s earnings, not from the earnings themselves.
Pricey by its own standards
Measuring every year-end share price against that year’s comparable earnings per share, Coca-Cola stock finished both 2021 and 2022 around 26 times earnings. That price-to-earnings ratio fell to about 22 in both 2023 and 2024, and 2025 closed at about 23 times earnings. Over those five year-ends, the average is about 24 times earnings.
At roughly $96, the stock now trades at about 29 times management’s earnings forecast for 2026. That’s more than at any of those five year-ends.
And even next year’s expected earnings put the stock at about 27 times earnings. In other words, buyers are now paying about a fifth more for every dollar of this year’s earnings than the stock’s recent average.
Sure, a company whose earnings grow faster can deserve a higher valuation. But an 11% rise would just be Coca-Cola’s fastest comparable earnings growth since 2021.
And Coca-Cola isn’t a growth stock. I don’t think one strong year justifies paying more than at any year-end over that span.
What price would get me to buy?
I’d still want a price closer to $80.
That price comes to about 24 times the earnings management expects for 2026, right around the stock’s five-year average at year-end. It’s also about 17% under where shares trade today.
This year’s higher outlook doesn’t shift that number much. Since February, management’s forecast has added around 10 cents a share to 2026 earnings. At 24 times earnings, the extra cents are worth about $2.50 a share — a small change next to a stock that has risen around $26 a share this year.
For today’s price to be 24 times earnings, Coca-Cola would need earnings per share of about $4. Growing about 7% a year from this year’s expected $3.33 (near its average rate from 2022 through 2025), it likely wouldn’t get there until 2029.
In the end, Coca-Cola is a solid dividend stock with a business in good shape, and this year’s faster earnings growth is a nice change after 2025’s 4%. But the stock has gotten far ahead of those earnings. At around 29 times this year’s expected earnings, I think it prices in about three years of growth that hasn’t come yet.
I’ll keep waiting for a price closer to $80.
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Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
