KO – Market expectations are for Uniform ROA to reach new peaks; management may have concerns about foreign operations, capital allocation, and ESG

June 6, 2022

  • Coca-Cola (KO) currently trades above corporate and historical averages relative to Uniform earnings, with a 30.3x Uniform P/E (Fwd. V/E’).
  • At these levels, markets are pricing in expectations for Uniform ROA to reach new peaks of 94%, accompanied by 3% Uniform asset growth.
  • Similarly, analysts expect Uniform ROA to improve to 67% in 2023, accompanied by 1% Uniform asset shrinkage.
  • If sustained going forward, these levels would imply a stock price closer to $38, representing approximately 42% equity downside for the firm.
  • Moreover, the firm’s most recent earnings call suggests management may have concerns about their foreign operations, capital allocation, and ESG.

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