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

Coca-Cola Enterprises Inc.CCE is set to report fourth-quarter and full-year 2015 results on Feb 11, before the market opens. Last quarter, it posted a positive surprise of 3.70%. Let's see how things are shaping up for this announcement.

Factors to Consider

Coca-Cola Enterprises expects the ongoing economic softness in Europe, evolving consumer landscape and an increasingly competitive environment to continue affecting sales in the fourth quarter. Moreover, currency translation, which provided tailwinds in 2014, has proved to be a major headwind in 2015, given the recent deterioration of the euro against the dollar.

These headwinds are expected to drag results this quarter. Nonetheless, the company has been undertaking many initiatives to support volume growth, which includes aggressive marketing/innovation plans like sports sponsorships and special programs to expand the distribution of new products; and online marketing plans to enhance digital and social media presence. Moreover, favorable commodity cost trends and regular shareholder returns should drive earnings growth.

Management expects 2015 adjusted earnings per share growth to meet the upper end of its guidance range of 6-8% on a comparable and currency-neutral basis. Currency translation is expected to hurt earnings by 18%.

On a comparable and currency-neutral basis, sales growth in 2015 is anticipated to be flat or slightly negative from 2014 levels. Operating income growth is projected to be slightly positive on a comparable and currency-neutral basis.

Earnings Whispers

Our proven model does not conclusively show that Coca-Cola Enterprises 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, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 1.96%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank: Coca-Cola Enterprises has a Zacks Rank #4 (Sell). As it is, 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

Here are some companies in the consumer staples sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat this quarter:

B&G Foods Inc. BGS , with an Earnings ESP of +6.52% and a Zacks Rank #3.

Dr Pepper Snapple Group, Inc. DPS , with an Earnings ESP of +1.02% and a Zacks Rank #3.

The Kraft Heinz Company KHC , with an Earnings ESP of +1.72% and a Zacks Rank #3.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

DR PEPPER SNAPL (DPS): Free Stock Analysis Report

B&G FOODS CL-A (BGS): Free Stock Analysis Report

KRAFT HEINZ CO (KHC): 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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