Coca-Cola Company

Coca-Cola needs no introduction. What does need clarification is why it's worth analyzing through the Graham lens in 2026. With EPS at $2.47 and a modest 5% growth rate, the stock looks expensive on a pure Graham-number basis — and it is. But there's a reason value investors still hold it: the brand is a pricing machine.

KO has consistently raised prices ahead of inflation, protected margins, and delivered dividend growth for 62 years. Warren Buffett owns over 400 million shares and has called it one of his best investments ever. The moat — global distribution, brand recognition, and an emotional connection consumers have with the product — is almost impossible to replicate.

At current prices, the margin of safety is thin or negative by strict Graham standards. We include KO here not as a "screaming buy" but as an educational contrast: sometimes you pay a fair price for a wonderful business rather than a cheap price for a fair business.

This is precisely the tension Ben Graham's more famous student, Warren Buffett, resolved — moving from "cigar-butt" investing to buying quality compounders at reasonable prices. KO is the canonical example of that philosophy.

The KO example teaches a crucial investing lesson: Graham's formula has limits with "franchise" businesses. A 78.5% payout ratio sounds alarming — they're paying out 78 cents of every dollar earned. But KO has done this for decades without cutting the dividend, because their earnings are remarkably stable year after year.

This is the tension in value investing: strict formula adherence would have kept you out of KO for 30 years, while patient holders compounded at 10%+ annually with dividends reinvested. The lesson isn't whether to buy KO today — it's understanding the difference between price and value, and why some businesses deserve premium multiples.

Understanding this distinction is one of the most important leaps a value investor can make.