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We expect Coca-Cola Enterprises Inc. (CCE - Analyst Report) to beat expectations when it reports first-quarter fiscal 2014results on Apr 24. Last quarter, the company delivered a positive earnings surprise of 3.85%. We note that Coca-Cola Enterpriseshas outperformed the Zacks Consensus Estimate in the preceding four quarters with an average positive surprise of 2.91%.

Let’s see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Coca-Cola Enterprisesis likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +2.27%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank: Coca-Cola Enterprisescarries a Zacks Rank #2 (Buy) which, when combined with +2.27% ESP, makes us confident about a positive earnings beat.

Note that stocks with Zacks Ranks #1, 2 or 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

What is Driving the Better-Than-Expected Earnings?

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

With signs of some improvement in the Western European economies, volumes have been better in the second half of 2013, than the first. Solid holiday promotions and execution and easier year-ago comparisons drove volume growth in the fourth quarter of 2013. However, in the first quarter of 2014, volumes are expected to be challenged by difficult year-over-year comparisons, one fewer selling day and shift in Easter timing from first quarter in 2013 to the second quarter this year. Volumes are, however, expected to improve thereafter in 2014.

However, cost savings and aggressive share buybacks should offset slower volume growth to boost earnings per share in the first quarter.

Other Stocks to Consider

Other stocks in the retail/consumer staples sector that have both a positive Earnings ESP and a favorable Zacks Rank are:

Church & Dwight Co. Inc. (CHD - Snapshot Report),with Earnings ESP of +1.37% and a Zacks Rank #3 (Hold).

The Cheesecake Factory Incorporated. (CAKE - Analyst Report), with Earnings ESP of +2.04% and a Zacks Rank #3.

Read the Full Research Report on CAKE
Read the Full Research Report on CCE
Read the Full Research Report on KO
Read the Full Research Report on CHD


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