Shares of Coca-Cola European Partners plc (CCE - Free Report) , or CCEP, have been riding high of late. The company is the world’s largest independent bottler of The Coca-Cola Company (KO - Free Report) , based on revenue.
Market sentiments have been favoring CCEP for quite some time now and are poised to carry the momentum forward.
What Makes CCEP a Solid Pick?
Ahead of the Industry
The stock has surged 36.7% year to date, faring a lot better than the industry’s gain of 14.1%. We feel this momentum will continue for this Zacks Rank #1 (Strong Buy) company. You can see the complete list of today’s Zacks #1 Rank stocks here.
Solid Q2 & Upbeat Guidance
On Aug 11, the company posted solid second-quarter 2017 results with both earnings and revenues surpassing the Zacks Consensus Estimate. The company reported comparable earnings of 74 cents per share (67 cents euro), reflecting an increase of 17.5% from 63 cents a year ago. Net sales of $3.36 billion increased 37.1% year over year in dollar terms.
Solid results reflect the successful execution of its sales and marketing strategies, accompanied by continued cost discipline. Also, favorable weather throughout the quarter contributed to the upside.
The company’s operating expenses decreased 31% year over year. This has helped CCEP to report better operating profit that grew significantly by 99%.
Comparable revenues in the quarter grew 5.5%. Operating expenses, on a comparable basis, increased 2% and comparable operating profit grew 15.5%.
Consequently, CCEP raised its 2017 comparable and Fx-neutral earnings per share growth expectation to the range of 10-12% range. The company expects currency translation to reduce earnings per share by approximately 2%. Meanwhile, the company remains on track to achieve pre-tax savings of €315 million to €340 million through synergies by mid-2019. Earlier, the company had expected modest low single-digit revenue growth, along with up to high single-digits growth in operating profit and earnings per share.
Estimates on the Upswing & Stellar Earnings Surprise History
We note that earnings estimates for CCEP have displayed a healthy uptrend, reflecting optimism in the stock’s prospects. The Zacks Consensus Estimate for CCEP’s current-year earnings has moved up 3.8%, reflecting four upward revisions against none downward, over the last 30 days. Also, next year’s earnings estimates have climbed 5.5% on the back of four upward revisions against none downward.
CCEP has an impressive earnings surprise history. Evidently, the company has outpaced/met the Zacks Consensus Estimate consistently in each of the trailing four quarters, delivering a average beat of 6.22%.
Healthy Growth Prospects
While CCEP has had a historical EPS growth rate of 23.2% compared with the industry average of 7.4%, investors should really focus on its projected growth. Here, the company is looking to grow at a rate of 17.9%, a lot higher than the industry average of 13.6%. Meanwhile, its revenues for the year are anticipated to increase 27.4%.
Solid VGM Score
The company flaunts an impressive VGM Score of B. Our VGM Score identifies stocks that have the most attractive value, growth, and momentum characteristics. In fact, our research shows that stocks with VGM Scores of A or B when combined with a Zacks Rank #1 or 2 (Buy) make solid investment choices.
Other Stocks to Consider
Investors may also consider stocks like Coca-Cola FEMSA, S.A.B. de C.V. (KOF - Free Report) , sporting a Zacks Rank #1, and New Age Beverages Corporation (NBEV - Free Report) , carrying a Zacks Rank #2.
Full-year 2017 earnings for Coca-Cola FEMSA and New Age Beverages are expected to increase 53.8% and 205%, respectively.
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