Rating Change #8

Coca-Cola Enterprises Inc ( CCE) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company has not been very careful in the management of its balance sheet.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 13.5%. Since the same quarter one year prior, revenues rose by 27.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • COCA-COLA ENTERPRISES INC has improved earnings per share by 44.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, COCA-COLA ENTERPRISES INC increased its bottom line by earning $1.83 versus $1.70 in the prior year. This year, the market expects an improvement in earnings ($2.17 versus $1.83).
  • After a year of stock price fluctuations, the net result is that CCE's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • 41.50% is the gross profit margin for COCA-COLA ENTERPRISES INC which we consider to be strong. Regardless of CCE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 13.30% trails the industry average.
  • CCE's debt-to-equity ratio of 0.97 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.29 is sturdy.

Coca-Cola Enterprises Inc. engages in the production, distribution, and marketing of non-alcoholic beverages of The Coca-Cola Company in western Europe. The company has a P/E ratio of 7.5, below the average food & beverage industry P/E ratio of 11 and below the S&P 500 P/E ratio of 17.7. Coca-Cola Enterprises has a market cap of $7.6 billion and is part of the consumer goods sector and food & beverage industry. Shares are down 2.7% year to date as of the close of trading on Friday.

You can view the full Coca-Cola Enterprises Ratings Report or get investment ideas from our investment research center.

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