Coca-Cola European Partners plc (AMS:CCE): Is Consumer Staples Attractive?
Coca-Cola European Partners plc (ENXTAM:CCE), a €15.76B large-cap, operates in the consumer staples sector, which is facing changes in demographics and purchasing behaviours forcing beverage companies to adapt to new trends. Consumer staple analysts are forecasting for the entire industry, an extremely elevated growth of 62.50% in the upcoming year , and an enormous triple-digit earnings growth over the next couple of years. Not surprisingly, this rate is more than double the growth rate of the NL stock market as a whole. Today, I’ll take you through the sector growth expectations, as well as evaluate whether Coca-Cola European Partners is lagging or leading in the industry. View our latest analysis for Coca-Cola European Partners
What’s the catalyst for Coca-Cola European Partners’s sector growth?
The beverage industry is reshaping itself, avoiding traditional sugary drinks and mass-market tactics for approaches that are more focused on health and personalized customer interaction. Players in the industry are tracking these changes more closer than ever to gauge consumer preferences so they can remain ahead of these trends. Over the past year, the industry saw growth in the twenties, beating the NL market growth of 16.76%. Coca-Cola European Partners lags the pack with its negative growth rate of -4.84% over the past year, which indicates the company will be growing at a slower pace than its beverage peers. Although Coca-Cola European Partners is poised to deliver a 57.84% growth next year, moving it from negative to positive territory, it still lags its industry average rate of growth of 62.50%.
Is Coca-Cola European Partners and the sector relatively cheap?
The beverage industry is trading at a PE ratio of 25.34x, above the broader NL stock market PE of 18.22x. This means the industry, on average, is relatively overvalued compared to the wider market. However, the industry returned a similar 9.96% on equities compared to the market’s 11.78%. On the stock-level, Coca-Cola European Partners is trading at a PE ratio of 23.56x, which is relatively in-line with the average beverage stock. In terms of returns, Coca-Cola European Partners generated 9.96% in the past year, in-line with its industry average.
Next Steps:
If Coca-Cola European Partners has been on your watchlist for a while, now may not be the best time to enter into the stock. The company is a beverage industry laggard in terms of its future growth outlook, and is trading relatively in-line with its peers. If growth and mispricing are important aspects for your investment thesis, there may be better investments in the consumer staples sector. However, before you make a decision on the stock, I suggest you look at Coca-Cola European Partners’s fundamentals in order to build a holistic investment thesis.
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Historical Track Record: What has CCE’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Coca-Cola European Partners? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
