Coca-Cola’s July 22 Earnings Report: The One Thing Wall Street Overlooked

Coca-Cola just served Wall Street a caffeinated surprise—but analysts were too busy sipping the Kool-Aid to notice.

The fizz behind the numbers

While soda stocks typically get dismissed as 'defensive plays,' Coke's latest report proves even dinosaurs can moonwalk when short-sellers aren't looking. The real story? A stealthy pricing power play that'd make DeFi degens blush.

Bottling up the bears

Revenue streams flowed like a broken vending machine—except this time, shareholders actually got their change. Global demand stayed stubbornly sticky despite 47 straight months of 'imminent recession' predictions from finance Twitter.

The bitter aftertaste

Here's the twist: all that growth came from raising prices, not volume. Guess those MBA-wielding execs finally discovered the 'inflation' button on the vending machine. Too bad they'll credit 'brand equity' instead of admitting they're juicing margins like a 2017 ICO.

Image source: Getty Images.

Being able to ask customers to pay more

Coca-Cola's organic revenue, which is a non-GAAP metric that excludes the impact of acquisitions, divestitures, and currency fluctuations, increased by 5% in the latest fiscal quarter. This figure was negatively impacted by concentrate sales, which declined 1%. But it was boosted by a 6% jump in price/mix. "Our price mix growth of 6% was primarily driven by approximately five points of pricing actions and one point of favorable mix," said CFO John Murphy on the Q2 2025 earnings call.

This highlights what I believe is a key contributor to Coca-Cola's success: proven pricing power. This benefit arising from its ability to raise prices yet retain business comes up in virtually all of its earnings reports. During the first quarter of this fiscal year, price/mix growth was 5%.

Famed investor Warren Buffett believes pricing power is one of the clearest signals that a company is high quality. This probably explains whyis a massive shareholder in Coca-Cola.

In Coca-Cola's case, the ability to consistently ask customers to pay more demonstrates just how powerful the brand is. This intangible asset is precisely what makes up the company's economic moat. And that supports Coca-Cola's staying power: The business has been around for well over a century.

It has 200 different brands sold in more than 200 countries and territories. A whopping 2.2 billion servings are consumed every day. Coca-Cola has the leading market share in the industry. And consumers have come to expect a consistent product. Add in Coca-Cola's top-notch marketing campaigns, and the company has figured out a way to drive DEEP emotional connections with customers.

This market positioning means that Coca-Cola will likely be able to continue increasing prices indefinitely. Of course, the price hikes must be within reason. But the point is that because consumers have developed an affinity to the brand, there is loyalty that Coca-Cola can keep leveraging over time.

Don't expect huge returns from Coca-Cola

Coca-Cola is a fantastic business thanks primarily to its pricing power and brand positioning. This has helped it generate robust profits, to the tune of $3.8 billion in net income in Q2. That translates to a net profit margin of 30%.

The stock might be a wise investment choice for those who like to generate income from their holdings. Coca-Cola's strong profitability has allowed the leadership team to raise the dividend in a jaw-dropping 63 straight years, with the latest bump being approved earlier in 2025. Its dividend yield of 2.97% is well ahead of the 1.25% that the average company in theindex pays.

However, investors looking to score huge returns will want to think twice. The stock won't provide enough capital appreciation to outperform the market. Coca-Cola simply doesn't register huge growth. This is an extremely mature company. Its drinks are already sold in every corner of the world, with minimal opportunities to drive meaningful expansion. Shares have significantly underperformed the S&P 500 in the past decade.

In the rare event that Coca-Cola's P/E multiple dips well below 20, investors shouldn't buy the stock. But those searching for dividend income will have a different view.