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Coca-Cola Enterprises’ (CCE - Analyst Report) fourth-quarter 2013 adjusted earnings of 54 cents per share beat the Zacks Consensus Estimate of 52 cents by 3.8% and the year-ago earnings of 45 cents by 20.0% driven by solid revenue increase.

Quarter Details

During the quarter, net sales grew approximately 6.0% year over year to $2.03 billion but fell marginally short of the Zacks Consensus Estimate of $2.05 billion by 1.0%. Excluding currency translations, revenues grew 3.5% driven by improvement in volumes.

Volumes grew 2.5% in the quarter, same as the preceding quarter. Volumes in the quarter were positively impacted by growth in Coca-Cola trademark brands, particularly Coca-Cola Zero, and energy segments. Net pricing per case decreased 0.5%, due to higher cost of sales per case. Volumes grew 2.0% in continental Europe. In Great Britain, volumes improved 2.5% due to strong growth of Coca-Cola trademark beverages.

The company’s cost of sales per case increased 1.0% in the quarter. Adjusted operating income grew 9% on a currency neutral basis to $232 million due to volume growth and expense control initiatives.

Share Repurchase

Coca-Cola Enterprises, the western European bottler of The Coca-Cola Company (KO - Analyst Report), began its third share repurchase program worth $1.5 billion in Jan 2013. In full year 2013, the company repurchased $1.0 billion worth of its stock. In Dec 2013, the board of directors of Coca-Cola Enterprises authorized a new $1 billion share repurchase program, which is the company’s fourth buyback program since its inception in 2010. In 2014, the company expects to buy back $800 million worth of shares.

Fiscal 2013

Coca-Cola Enterprises’ fiscal 2013 adjusted earnings of $2.51 per share beat the Zacks Consensus Estimate of $2.50 by 0.4% and the year-ago earnings of $2.26 by 11.1% driven by revenue increase, currency tailwinds, and share buybacks. The company’s full year earnings exceeded the company’s guided range of $2.45 to $2.50 per share. Currency translation had a favorable impact of 4 cents per share.

During 2013, net sales grew approximately 2.0% year over year to $8.21 billion, almost in line with the Zacks Consensus Estimate. Excluding currency tailwinds, revenues grew 0.5% driven by improvement in both volumes and pricing.

2014 Outlook

The company maintained its 2014 guidance. In 2014, adjusted earnings are expected to grow approximately 10% in constant currency terms. In addition, currency is expected to benefit 2014 earnings per share in the range of 3%–4%.

While adjusted constant currency net sales are expected to grow in the low single-digit range, operating income is expected to grow in the mid single-digit range.

Coca-Cola Enterprises expects free cash flow for full-year 2014 to be in the range of $600 million–$650 million. Capital expenditures are expected to be approximately $350 million. The company expects the weighted average cost of debt to be around 3%. The effective tax rate is expected in a range of 26% to 28%.

Coca-Cola Enterprises carries a Zacks Rank #3 (Hold). A better-ranked beverage stock is The WhiteWave Foods Co. (WWAV - Snapshot Report), which sports a Zacks Rank #1 (Strong Buy). Monster Beverage Corp. (MNST - Analyst Report) with a Zacks Rank #2 (Buy) is another company worth considering in the consumer staples sector.

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