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On Mar 7, 2014, Coca-Cola Enterprises Inc. (CCE - Analyst Report) reached a 52-week high of $47.90 as the share price has been on the rise ever since it reported strong fourth-quarter fiscal 2013 results on Feb 5. Coca-Cola Enterprises carries a Zacks Rank #2 (Buy).

Share Price Drivers

Coca-Cola Enterprises is anexclusive western European bottler of The Coca-Cola Company (KO - Analyst Report) and is geographically focused in Western Europe.

Coca-Cola Enterprises’ fourth-quarter 2013 adjusted earnings of 54 cents per share beat the Zacks Consensus Estimate by 3.8%. Earnings increased 20.0% over the prior-year quarter driven by currency benefits, lower share count and strong margins.

Though marginally short of the Zacks Consensus Estimate, revenues grew 6% year over year due to volume growth and successful marketing initiatives like the “Share a Coke” campaign. Volumes growth was driven by solid holiday promotions and execution and easier comparisons due to soft volume growth in the prior-year quarter. Adjusted operating income grew 9% on a currency neutral basis to $232 million due to volume growth and cost reduction.

The estimates were mostly revised upwards in response to the strong results. The Zacks Consensus Estimate for fiscal 2014 increased 0.7% and that for fiscal 2015 went up 1% over the last 60 days.

Also, the board of directors at Coca-Cola Enterprises announced a 25% increase in its quarterly dividend. The company has increased its dividend by at least 25% in each of the last five years. In addition, Coca-Cola Enterprises has already completed two $1 billion share repurchase programs since the divestiture of its North American operations to The Coca-Cola Company.

In addition, the board authorized another $1 billion buyback program in December last year apart from the current plan under which the company is buying shares. The regular dividend hikes and share buybacks can be achieved with its solid balance sheet and strong free cash flows.

We believe Coca-Cola Enterprises’ strong brand portfolio, solid cash position, cost saving initiatives and accelerated share buybacks will help it to ride out the current volatile environment and spur profitability. Moreover, the company is seeing some signs of improvement in the Western European economies.

Other Stocks to Consider

Other stocks in the beverage sector that are doing well include Dr Pepper Snapple Group, Inc. (DPS - Analyst Report) and Monster Beverage Corp. (MNST - Analyst Report).  Both stocks carry the same rank as Coca-Cola Enterprises.

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