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What Awaits Coca-Cola Enterprises (CCE) in Q4 Earnings?

Coca-Cola European Partners Plc CCE, also known as CCEP, is expected to report fourth-quarter and full-year 2016 results on Feb 9. Last quarter, it posted a positive surprise of 2.78%.

Let’s see how things are shaping up for this announcement.

Factors At Play

CCEP was formed on May 28, 2016, through the combination of Coca-Cola Enterprises or CCE, Coca-Cola Iberian Partners or CCIP and CCEG or Coca-Cola Erfrischungsgetränke AG. CCEP, the world's largest independent Coca-Cola bottler based on revenues, is a multinational bottling company engaged in the marketing, production and distribution of Coca-Cola KO products in Europe.

CCEP is gaining significant synergies from the merger and is expected to continue to drive growth in the foreseeable future. The company’s continuous focus on brand and package innovation, strengthening execution and customer service, and further improving operating effectiveness will help it drive growth.

Meanwhile, we are cautious about the evolving consumer landscape and an increasingly competitive environment that may affect sales. Moreover, currency translation is a major headwind that is expected to have a negative currency impact of approximately 4.5% in 2016.

For full-year 2016, CCEP expects approximately 1% of revenue growth, modest mid-single-digit operating profit growth and EPS growth in a mid-teen range.

For the fourth quarter, the Zacks Consensus Estimate for earnings is pegged at 46 cents, reflecting a 14% year-over-year decline, while the consensus for revenues is at $2.79 billion, implying a 71.4% year-over-year increase.

Earnings Whispers

Our proven model does not conclusively show that CCEP is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP: The Earnings ESP is -4.35% as the Most Accurate estimate of 44 cents per share is lower than the Zacks Consensus Estimate of 46 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: CCEP’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about a positive earnings surprise.

We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stocks to Consider

Some stocks in the consumer staples sector that have both a positive Earnings ESP and a favorable Zacks Rank include:

Coty Inc. COTY, slated to report its quarterly numbers on Feb 9, has an Earnings ESP of +8.33% and a Zacks Rank #3.

Sanderson Farms, Inc. SAFM has an Earnings ESP of +4.48% and a Zacks Rank #3. The company is scheduled to report its quarterly numbers on Feb 23. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pinnacle Foods, Inc. PF has an Earnings ESP of +1.27% and a Zacks Rank #2. The company is slated to report its quarterly numbers on Feb 23.

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Coca-Cola European Partners PLC (CCE): Free Stock Analysis Report
Coca-Cola Company (The) (KO): Free Stock Analysis Report
Sanderson Farms, Inc. (SAFM): Free Stock Analysis Report
Coty Inc. (COTY): Free Stock Analysis Report
Pinnacle Foods, Inc. (PF): Free Stock Analysis Report
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