The Dow Jones Industrial Average ($DOWI) has been experiencing downward pressure in 2025, primarily due to persistent concerns about inflation and its impact on corporate profits. Rising interest rates maintained by the Federal Reserve to combat inflation have continued to make bonds more attractive compared to stocks, leading to a rotation out of equities. 

Investor sentiment has also been affected by ongoing geopolitical tensions and their impact on global trade and supply chains. Institutional investors have been taking a more defensive position, shifting their portfolios toward value stocks and sectors traditionally considered safer during economic uncertainty. Additionally, profit-taking following the strong bull market of previous years has contributed to the index's decline as investors look to lock in gains and reassess their investment strategies.

Against this backdrop, perhaps it’s not surprising to find a longtime Warren Buffett investment from the defensive consumer staples sector at the top of the Dow’s year-to-date performers. Coca-Cola (KO) stock is up 16.5% through the end of April, while recent tech sector standouts like Nvidia (NVDA) and Salesforce (CRM) are among the index’s worst YTD laggards.

KO Stock Outperforms in 2025

Coca-Cola's Q1 2025 financial performance demonstrates remarkable resilience in the face of global economic challenges, with the company reporting earnings per share of $0.73, surpassing analyst expectations of $0.71. Despite a 2% decline in reported revenue to $11.13 billion, the company achieved impressive organic revenue growth of 6%, driven by strategic pricing initiatives and robust international market performance.

The company's global unit case volume grew by 2%, with particularly strong showings in emerging markets such as China, Brazil, and India, though North American volumes experienced a 3% decline amid higher pricing strategies. Operating margin saw a substantial improvement, expanding to 32.9% from 18.9% in the previous year's quarter, highlighting effective cost management and strong execution of business strategies. Coca-Cola Zero Sugar continued its growth trajectory, posting an impressive 14% increase in sales.

How Coke is Handling Tariffs

Coke’s localized production model, especially its U.S.-based concentrate manufacturing, has positioned it favorably in the current tariff environment, with management describing potential tariff impacts as "manageable." This strategic advantage, combined with strong pricing power evidenced by a 5% increase in price/mix across regions, has helped maintain profitability despite various market pressures.

What’s the Outlook for KO Stock?

Looking forward, Coca-Cola maintained its full-year 2025 guidance, projecting 5-6% organic revenue growth and 7-9% comparable currency-neutral earnings growth, despite anticipated currency headwinds of 2-3%. 

The company's free cash flow situation faced a temporary setback due to a significant one-time payment of $6.1 billion related to its 2020 Fairlife acquisition, but normalized free cash flow remained positive at $558 million. Coke’s Dividend King status remains secure with its 63rd consecutive annual increase, and KO is now offering a 2.84% yield to investors.

Analysts maintain a bullish “Strong Buy” consensus with an average price target of $77.65, though the forward price/earnings (P/E) ratio of 24.46 indicates that KO may already be priced to perfection around current levels.