The Coca-Cola Co.

The stable outlook reflects our expectation that the company will manage leverage within its target debt-to-EBITDA ratio after funding the Costa acquisition and steadily reduce debt to EBITDA below 2.5x by 2020. A combination of stronger operating income and better free cash flows should lead to the lower debt leverage. Free operating cash flow should benefit from a combination of lower capital expenditures now that Coke's North American bottlers have been divested. Operating income should benefit from cost efficiencies and continued healthy organic growth. These improvements should allow annual discretionary cash flow to exceed $1 billion over the next two years, giving the company a fair degree of flexibility to manage to its target debt-to-EBITDA ratio of 2.0x to 2.5x

...Coke's strong brand strength and global reach in non-alcoholic beverage remains a key credit strength.Strong brand awareness continues to contribute to The Coca-Cola Co.'s (Coca Cola) leading share (roughly 37%) of the mature U.S. carbonated soft drink (CSD) market, its estimated worldwide CSD market share of more than 45%, and its estimated No. 1 position in the U.S. nonalcoholic liquid refreshment beverage category, according to Euromonitor. Key to the company's business risk profile are the benefits from its broad portfolio of well-known brands, 20 of which are worth at least $1 billion, including the Coca-Cola brand, which is ranked the world's fourth most valuable brand globally, according to Interbrand. Financial policies are more clearly defined now that Coke has a formal debt to EBTIDA target.The company formally announced a net debt to EBITDA target range of 2x to 2.5x at the beginning of 2018 when it announced its fiscal 2017 earnings. Within this target range, the company's investment...

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