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The Coca-Cola Company’s (KO - Analyst Report) strategic bottling partner, Coca-Cola Enterprises Inc. (CCE - Analyst Report) is set to report fourth quarter 2012 results on Feb 7. Last quarter it posted a positive surprise of 2.90%. Let’s see how things are shaping up for this announcement.

Positive & Negative Factors in the Past Two Quarters

Coca-Cola Enterprises’ second and third quarters were challenging mainly due to volume softness and currency headwinds.

In Oct 2012, Coca-Cola Enterprises sold its North American operations to The Coca-Cola Company and took over the latter’s bottling operations in Norway and Sweden. Coca-Cola Enterprises has thus transformed itself into an exclusive western European bottler. The company is thus exposed to the economic uncertainty of this region, including steep price competition in Great Britain and headwinds from increased taxes on beverages with sweeteners in France.

Even though Coca-Cola Enterprises is facing some challenges in the short term, the long term fundamentals of the company are encouraging. The company distributes one of the world's most recognized brand portfolios, with growing core brands led by the Coca-Cola trademark. In addition, the company focuses on innovation in new brands, flavor extensions, new packaging or sweeteners.  

Earnings Whispers?

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 Earnings ESP:  Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method), is at 0.00%.

Zacks Rank #3 (Hold). Coca-Cola Enterprises’ Zacks #3 Rank (Hold) when combined with an ESP of 0.00%, makes surprise prediction difficult. We caution against stocks with Zacks #4 and #5 Ranks (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Other related companies to consider include Coca-Cola Hellenic Bottling Company S.A. and Coca-Cola FEMSA S.A.B. de C.V. (KOF - Snapshot Report) both carrying a Zacks Rank #2 (Buy).


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