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Coca-Cola European Partners (CCE) Q2 Earnings: What's Up?

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We expect Coca-Cola European Partners Plc (CCE - Free Report) , also known as CCEP, to beat expectations when it reports second-quarter 2017 results on Aug 10, before market opens.

Last quarter, it posted a positive surprise of 6.45%.The company surpassed the Zacks Consensus Estimate for earnings in two of the past four quarters, with an average miss of 1.12%. The chart below depicts the price and earnings surprise history:

Coca-Cola European Partners PLC Price and EPS Surprise

 

Why the Likely Positive Surprise?

Our proven model shows that CCEP is likely to beat earnings because it has the perfect combination of the two key ingredients.

Zacks ESP: Earnings ESP for CCEP is +4.69% because the Most Accurate estimate is 67 cents, while the Zacks Consensus Estimate is pegged at 64 cents. This is a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: CCEP currently has a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) combined with a positive Earnings ESP have a significantly higher chance of beating earnings estimates. You can see the complete list of today’s Zacks #1 Rank stocks here.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement.

The combination of CCEP‘s favorable Zacks Rank and positive ESP makes us reasonably confident of an earnings beat.

What is Driving the Better-than-Expected Earnings?

The firm has seen solid earnings estimate revision activity over the past month, suggesting increasing analysts’ bullishness on the company’s prospects right before the earnings release. Current quarter estimates have risen from 63 cents per share to 64 cents over the last 30 days. This reflects a year-over-year increase of 1.9%. The stock has seen strong trading so far this year, with the share price rising 38.7%.

CCEP is gaining significant synergies from the merger and is expected to continue to drive growth in the foreseeable future. The company’s continuous focus on brand and packaging innovation, strengthening execution and customer service, and further improving operating effectiveness will help it drive growth. For the second quarter, the Zacks Consensus Estimate for revenues is $3.28 billion, implying a 34.2% year-over-year increase.

Releases in the Sector

General Mills Inc.’s (GIS - Free Report) cost-saving initiatives have helped it post better-than-expected results in fourth-quarter fiscal 2017 along with a solid increase in adjusted operating profit margin. Total revenues however declined 3% year over year owing to lower organic sales.

The Hershey Company (HSY - Free Report) beat the Zacks Consensus Estimate for earnings and revenues in second-quarter 2017 by 19.8% and 0.7%, respectively.

Dr Pepper Snapple Group Inc. (DPS - Free Report) reported second-quarter 2017 results, with earnings missing the Zacks Consensus Estimate by 2.3% and revenues beating the same by 1.7%.

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