On Apr 2, we maintained a Neutral recommendation on
Coca-Cola Enterprises Inc.
), due to mixed fourth-quarter results.
Why the Neutral Recommendation?
Coca-Cola Enterprises' fourth-quarter 2012 earnings of 45
cents per share beat the Zacks Consensus Estimate by 4.7%.
Earnings rose 25.0% over the prior-year quarter as operating
income growth and a lower share count made up for the slim
revenue growth in the quarter. Revenues were in line with the
Zacks Consensus Estimate.
However, volumes declined in the quarter due to ongoing
challenges and difficult year- ago comparisons. CCE has been
facing many challenges lately, such as steep price competition in
Great Britain, overall soft macro economic conditions and
difficult beverage market conditions in France due to increase in
French excise tax (FET).
More than 90% of the sales volume of Coca-Cola Enterprises
comprises products of
The Coca-Cola Company
). In Oct 2012, Coca-Cola Enterprises sold its North American
operations to The Coca-Cola Companyand took over the latter's
bottling operations in Norway and Sweden.
Coca-Cola Enterprises has thus transformed itself into an
exclusive western European bottler. The company is thus, exposed
to the economic uncertainty of this region.
However, we believe that the company's strong brand portfolio
and solid cash position, cost saving initiatives and accelerated
share buybacks will help it sail through the current environment
and spur profitability. Moreover, the company is hopeful of
returning to volume growth in 2013 on the back of solid operating
and marketing plans. Infact CCE maintained its 2013 earnings,
revenues and operating income guidance despite the current
challenges and macro economic weaknesses.
Despite the mixed fourth-quarter results, estimates largely
moved upwards for 2013 and 2014 due to somewhat encouraging
outlook for 2013. The Zacks Consensus Estimate moved up by
a penny each in 2013 and 2014 over the last 60 days.
Other Stocks to Consider
Coca-Cola Enterprises carries a Zacks Rank #2 (Buy). Another
stock in the beverage industry that is currently performing well
Coca-Cola Hellenic Bottling Company S.A.
) - Zacks Rank #2 (Buy). In the broader consumer staples sector,
Flower Foods, Inc.
) is worth mentioning, carrying Zacks Rank #1 (Strong Buy).
COCA-COLA ENTRP (CCE): Free Stock Analysis
COCA COLA HELNC (CCH): Free Stock Analysis
FLOWERS FOODS (FLO): Free Stock Analysis
COCA COLA CO (KO): Free Stock Analysis Report
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