Coca-Cola Raises 2026 Comparable EPS Growth Floor to 11%
Key Facts
Coca-Cola raised the floor of its forecast for comparable earnings per share growth in fiscal 2026 to 11%, from a prior range of 9% to 10%, after reporting third-quarter net revenue of $13.4 billion, up 7% from the year-earlier period. The company said in its earnings release that its full-year outlook includes an approximately 3% favorable currency impact, offset by an approximately 1% negative impact from acquisitions and divestitures. Organic revenue, a non-GAAP measure, also grew 7% during the quarter. Reported EPS rose 8% to $0.93, while comparable EPS increased 11% to $0.91. Both measures included a favorable currency impact of approximately two percentage points.
Organic revenue growth was driven by a 7% increase in concentrate sales, while price and mix rose 1%. The company said concentrate sales growth led package volume growth by two percentage points because of the timing of concentrate shipments during the quarter. For the nine months ended October 2, net revenue increased 9% and organic revenue rose 8%, while package volume grew 4%. Consolidated operating income increased 12% in the quarter, and comparable currency-neutral operating income grew 8%. The company attributed operating performance to organic revenue growth, partly offset by higher marketing investments and operating expenses.
Global package volume increased 5%, with Coca-Cola Zero Sugar volume up 16% and water up 8%, while sports drink volume declined 3%. In North America, package volume was flat, while comparable currency-neutral operating income grew 5%. The company said organic revenue growth and the timing of marketing investments supported operating income in the region, but higher input costs and operating expenses limited that effect. The results show a contrast between global volume growth and flat volume in the North American market. Higher packaging and freight costs were among the pressures facing the company as commodity prices rose, Reuters reported.
In Europe, the Middle East and Africa, package volume grew 5% and comparable currency-neutral operating income increased 7%. But the company lost value share in total ready-to-drink nonalcoholic beverages in the region, as gains in Nigeria and Morocco did not offset losses in France and the United Kingdom. In Latin America, package volume increased 6% and price and mix rose 7%, while comparable currency-neutral operating income grew 14%. The company attributed the region's price and mix growth to pricing actions and favorable product mix. The contrast places regional volume and profitability performance alongside differing market-share results.
Reported operating margin was 33.4% in the quarter, compared with 32.0% a year earlier, while comparable operating margin rose to 32.9% from 31.9%. Coca-Cola attributed the expansion in comparable margin to organic revenue growth and the currency impact, partly offset by higher marketing investments and operating expenses. From the start of the year through October 2, cash flow from operations was $12.5 billion and free cash flow was $11.4 billion. The company raised its 2026 free cash flow guidance floor to $13.0 billion, from about $12.4 billion in its prior forecast. It also raised the floor of its full-year organic revenue growth forecast to 5%, after a prior forecast of about 5%, and lowered its underlying effective tax rate forecast to 19.7% from 19.9%.
Third-quarter revenue and adjusted earnings per share exceeded analysts' estimates, Reuters reported: revenue was $13.38 billion versus an estimate of $12.92 billion, and adjusted EPS was 91 cents versus expectations of 88 cents. Even so, the company's shares pared gains and were slightly lower in premarket trading. Reuters had reported that Coca-Cola raised its 2026 currency-neutral comparable EPS growth forecast to at least 9%, from a range of 7% to 8%, citing higher packaging costs as a pressure. The company said in its release: "Our results this quarter demonstrate the sustained momentum of our system, giving us confidence in our updated full-year guidance." Chief Executive Henrique Braun added that the company continues to invest in its brands, capabilities and people.
For the fourth quarter of 2026, the company expects an approximately 1% favorable currency impact on comparable revenue, offset by an approximately 4% negative impact from acquisitions and divestitures. For comparable EPS, it expects an approximately 4% favorable currency impact and an approximately 3% negative impact from acquisitions and divestitures. Preliminary considerations for fiscal 2027 include a slight negative currency impact, and negative impacts from acquisitions and divestitures of approximately 8% on comparable revenue and approximately 2% on comparable EPS. The company said it will announce its fiscal 2027 guidance when it releases fourth-quarter results. The next earnings report will therefore provide the date for disclosing the full-year outlook for the following year.