KO – Market expectations are for record-high Uniform ROA, but management may be concerned about execution, pricing, and guidance

• The Coca-Cola Company (KO:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 32.2x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about sustained execution strength, pricing headwinds, and their ability to meet future guidance.
  
• Specifically, management may lack confidence in their ability to sustain strong execution in Turkey and Pakistan, drive share gains through disciplined innovation and effective marketing, and achieve their Beverages for Life ambition. Moreover, management may have concerns about pricing headwinds, the impact of fragmented trade in their B2B operations, and their unfamiliarity with the alcohol business. Also, they may lack confidence in their ability to meet elevated guidance, expand their nonblack tea segment globally, and sustain global collection rates in packaging. Finally, management may have concerns about a leveling out of concentrate shipments, and they may be overstating AHA sparkling water’s rapid consumer traction and the agility and adaptability of their business.