Coca Cola Projects Better Future - Analyst Blog

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The European supplier of Coco-Cola drinks, Coca-Cola Enterprises Inc. ( CCE ), yesterday, came out with its projections for the rest of 2011 and for 2012.

Coco-Cola Enterprises expects its earnings for full year 2011 to reach the higher end of its previously guided earnings per share ( EPS ) range of $2.14 to $2.18, reflecting a modestly improved outlook for operating income, as well as the nominal decrease in expected effective tax rate for 2011. The guidance includes a 15 cent per share foreign exchange benefit.

Looking into 2012, the company continues to anticipate growth, marking the seventh consecutive year of growth with results at or above its long-term objectives.

The company projects 2012 earnings per share to rise 10% to 12%, driven by solid operating income in a mid-single digit to high-single digit range, and continued execution of its planned share repurchase program. The Zacks Consensus EPS Estimates for 2011 and 2012 are $2.16 and $2.37, respectively.

Coca-Cola Enterprises expects to see a mid-single digit range increase in its 2011 revenue, with operating income growth expected to be in the high single digit range. For 2012, the company anticipates revenue growth in the mid to high-single-digit range.

However, the company expects to see a modest pull back in its 2011 gross margins while operating margins are expected to be up modestly, comparable to 2010 margins.

Coca-Cola Enterprises' effective tax rate for 2011 continues to be expected in the range of 26% to 27%, while the tax rate for 2012 is expected to be in the range of 26% to 28%.

Additionally, the company expects to end 2011 with strong free cash flows of roughly $525 million, with capital expenditures of approximately $375 million. The company expects to generate free cash flows of nearly $550 million in 2012 with capital expenditures of $400 million.

This positive outlook, coupled with the company's strong balance sheet and ability to grow the business enables the company to return significant cash to shareowners through dividends and share repurchases.

As a result, Coca-Cola Enterprises has outlined its plans to buy back nearly $500 million worth of stock in 2012 following the completion of its $1 billion repurchase plan in 2011.

Coca-Cola Enterprises said its outlook for 2011 and 2012 is guided by the solid operating and marketing plans that are centered on maximizing the benefits of key significant initiatives, including the London Olympics and Euro 2012 Soccer. The company also pointed out that the Olympic and Euro 2012 events would supplement its longstanding programs for business promotion.

Coke with Food is an ongoing effort, which helps expand the overall footprint of the brands. These programs create a very solid platform from which to engage consumers and continue to grow relationships.

To summarize, the company continues to make excellent progress in building its business and creating a sustained level of increasing profitability. Its success has been driven by a combination of operating and marketing strategies built on its brand value and its maximized operating efficiency.

Comprising of legacy European bottling operations and the bottling operations acquired from The Coca-Cola Company ( KO ) in Norway and Sweden, Coca-Cola Enterprises currently holds a Zacks #2 Rank, which translates into a short-term Buy rating. On a long-term basis, however, we maintain a Neutral rating on the stock.

COCA-COLA ENTRP ( CCE ): Free Stock Analysis Report

COCA COLA CO ( KO ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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