Coca-Cola European Partners (CCE) Q3 Earnings: What's Up?

Coca-Cola European Partners Plc or CCEP (NYSE:CCE) is set to report third-quarter 2017 results, before the opening bell on Nov 7.

Last quarter, it delivered a positive earnings surprise of 15.63%. The company surpassed the Zacks Consensus Estimate for earnings in three of the trailing four quarters, with an average beat of 6.22%. The chart below depicts the price and earnings surprise history:

Coca-Cola European Partners PLC Price and EPS Surprise

Coca-Cola European Partners PLC Price and EPS Surprise | Coca-Cola European Partners PLC Quote

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

It is quite evident in the last reported quarter when sales and marketing plans as well as favorable weather drove results. Its revenues increased 40.5% year over year driven by the inclusion of Germany, Iberia, and Iceland. Comparable FX-neutral sales were up 7.5%, including better price/case (up 3%) and volumes (up 4.5%). Strong results were driven by 9% growth in Northern European territories (Belgium/Luxembourg/Netherlands) and 7% growth in Germany. However, Norway and Great Britain weighed on its results. We expect the growth momentum to continue in the to-be-reported quarter as well.

Importantly, CCEP remains on track to achieve pre-tax synergy savings of €315 million to €340 million by mid- 2019. Again, it expects to achieve half of its total target by end of 2017 that is likely to help CCEP boost its bottom line considerably.

Given the solid performance, CCEP even raised its 2017 guidance, though FX is expected to hurt earnings by 2%.
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Overall, for the third quarter, the Zacks Consensus Estimate for earnings is pegged at 80 cents, reflecting a 7.4% year-over-year increase. The consensus estimate for revenues is $3.5 billion, implying a 5.9% increase.

Here is what our quantitative model predicts.

CCEP does not have the right combination of ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — which is required to increase the odds of an earnings beat.

Zacks ESP: The Earnings ESP for CCEP is +1.89%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: CCEP carries a Zacks Rank #4 (Sell). Notably, we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Releases in the Sector

The Coca-Cola Company (NYSE:KO) reported better-than-expected third-quarter 2017 results. Lower SG&A expense (down 20%), higher gross margin (up 170 basis points or bps), and higher operating margin (up 404 bps) helped it come up with better numbers. However, Coca-Cola's total sales decreased 15%, marking the 10th consecutive quarterly decline in revenues.

PepsiCo, Inc. (NYSE:PEP) reported mixed third-quarter 2017 (ending Sep 9) results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. Nonetheless, this is the sixth consecutive quarter of a positive earnings surprise.

Dr Pepper Snapple Group Inc.’s (NYSE:DPS) third-quarter 2017 adjusted earnings per share of $1.10 missed the Zacks Consensus Estimate by 4.3%. Earnings were down 6% on a year-over-year basis owing to the recent hurricanes in United States, earthquakes in Mexico and a previously disclosed write-off of prepaid resin inventory. Net sales of $1.74 billion missed the Zacks Consensus Estimate by 1.7% but increased 4% year over year.

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