Coca-Cola Enterprises Inc. (CCE) is set to report fourth-quarter and full year 2014 results on Feb 12, before the market opens. Last quarter, it posted a positive surprise of 4.55%. Let’s see how things are shaping up for this announcement.
Factors to Consider
Coca-Cola Enterprises sales remained sluggish in 2014 due to weak volumes. With volumes and sales remaining weak, the company was forced to drive profit only through cost cutting and share repurchases.
The Western European bottler of The Coca-Cola Company (KO) lowered its full-year sales and profit outlook twice due to ongoing macro and competitive pressures in Europe. Moreover, management expects currency translation to hurt fourth-quarter earnings in the range of 7% to 8%, though year-to-date it has been a benefit in 2014. However, the quarter is expected to gain from an extra selling day.
Management expects the ongoing economic softness and operating challenges to persist in 2015 as well, thereby limiting revenue growth.
Moreover, management expects to have limited benefit from improved commodity cost outlook in 2015 as the benefits have already been realized in 2014. Also, currency translation is expected to be a headwind in 2015 as against being a tailwind in 2014.
Earnings Whisper?
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 of #1, 2 or 3 for this to happen. That is not the case here, as you will see below.
Zacks ESP: The Earnings ESP is +1.79%, as the Most Accurate estimate stands at 57 cents while the Zacks Consensus Estimate is lower at 56 cents.
Zacks Rank: Coca-Cola Enterprises carries a Zacks Rank #4 (Sell). We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks to Consider
Here are some other 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:
Dr Pepper Snapple Group, Inc. (DPS), Earnings ESP of +2.30% and a Zacks Rank #2 (Buy).
Monster Beverage Corporation (MNST), Earnings ESP of +5.09% and a Zacks Rank #3 (Hold).
The Clorox Company (CLX), Earnings ESP of +0.92% and a Zacks Rank #2.
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