Overview

Coca-Cola Europacific Partners plc (CCEP) is a leading Coca-Cola bottler focused on Europe and Asia-Pacific, operating under long-term franchise agreements with The Coca-Cola Company. With an approximate market capitalization of $40.5 billion, CCEP is a large-cap consumer defensive name offering exposure to non-alcoholic beverages across predominantly mature, higher-income markets.

The stock currently trades at a trailing P/E of ~22.8x and a forward P/E of ~17.2x, implying expectations for continued earnings growth and margin stability. Analyst sentiment is constructive, with a consensus recommendation key of “buy” and a mean target price of about $96.4 (range roughly $73.0–$113.5), suggesting upside potential from current levels depending on the share price at the time of analysis. The shares have delivered a ~20.3% 52-week total return, slightly ahead of the S&P 500’s ~19.4% over the same period.

Institutional participation is meaningful but not dominant, with ~40% of shares held by institutions, providing a base of long-term capital yet leaving room for incremental institutional sponsorship.

Profitability and Cash Flow

CCEP exhibits solid profitability metrics consistent with a scaled beverage bottler:

• Operating margin: ~12.9%
• EBITDA margin: ~16.3%
• Net profit margin: ~7.3%
• Return on equity (ROE): ~17.9%

These figures indicate effective conversion of revenue into profit and a respectable level of return on shareholder capital, especially given the capital-intensive nature of bottling operations.

Free cash generation is a key part of the equity story:

• Free cash flow: approximately $1.78 billion (latest snapshot)

This level of FCF supports ongoing dividends, interest payments, and selective capital returns/share repurchases, while funding necessary capex for production, distribution, and packaging initiatives.

However, the balance sheet is geared:

• Debt-to-equity ratio: ~141%
• Current ratio: ~0.83

High leverage amplifies equity returns in stable periods (helping support the ~17.9% ROE) but reduces flexibility in downturns or in a higher-rate environment. The sub-1.0 current ratio points to reliance on consistent cash generation and access to short-term funding.

Valuation relative to fundamentals:

• Price-to-book: ~4.34x
• Price-to-sales (TTM): ~1.94x

These multiples are typical for high-quality, branded beverage and bottling assets, suggesting the market is pricing CCEP as a durable, cash-generative compounder rather than a deep value opportunity.

Earnings History and EPS Trends

The available earnings history is dated (primarily 2016–2020), but it still illustrates CCEP’s pattern of generally meeting or modestly beating expectations, punctuated by periods of underperformance:

• In multiple quarters (e.g., 2016–2019), EPS was at or above estimates, such as:
  • Q2 2016: EPS $0.37 vs. estimate $0.37 (in line).
  • Q3 2016: EPS $0.56 vs. $0.66 (miss, –15%).
  • Q2 2019: EPS $0.44 vs. $0.37 (beat, +18.1%).
• During the 2019–2020 period, the company experienced notable EPS volatility and misses, likely reflecting operational and macro shocks:
  • Q3 2019: EPS $0.44 vs. estimate $0.77 (miss, –42.5%).
  • Q4 2019: EPS $0.53 vs. $0.85 (miss, –37.6%).
  • Q3 2020: EPS $0.14 vs. $0.46 (miss, –69.3%).

These large negative surprises correspond to a period of significant disruption (including the COVID-19 pandemic and on-premise channel closures), illustrating CCEP’s sensitivity to away-from-home consumption and macro shocks despite its overall defensive category.

Recent snapshot metrics show earnings growth of ~15% and revenue growth of ~4.5%, indicating that the business has returned to a moderate growth trajectory after prior disruptions. With a forward P/E of ~17.2x vs. trailing P/E of ~22.8x, the market is expecting EPS to grow faster than revenue via margin expansion, mix improvement (e.g., higher-priced SKUs), and synergy capture from past M&A.

Growth Profile

CCEP’s growth profile is characterized by moderate top-line expansion supported by pricing and mix, with earnings growing somewhat faster:

• Revenue growth: ~4.5% (latest snapshot)
• Earnings growth: ~15%

Drivers of the growth outlook include:

• Pricing power and premiumization: As a major Coca-Cola system bottler, CCEP can implement pricing actions in coordination with The Coca-Cola Company, particularly in developed markets with strong brand equity and relatively inelastic demand.
• Portfolio diversification: Shift toward low/no-sugar variants, energy drinks, and ready-to-drink categories aimed at healthier or higher-margin segments can support revenue per case and margins.
• Route-to-market efficiency: Investments in digital tools, logistics, and packaging innovation can support incremental margin expansion even in low- to mid-single-digit revenue growth environments.
• Synergies from past acquisitions: Integration of legacy European and Asia-Pacific bottling operations can yield operational and procurement synergies, supporting the ~16.3% EBITDA margin.

On the other hand, CCEP’s geographic footprint is largely in mature markets where per-capita consumption is already high, limiting volume growth. Consequently, outperformance vs. peers will likely rely on execution, mix, and disciplined capital allocation rather than explosive top-line expansion.

Given the price-to-sales of ~1.94x and forward P/E of ~17.2x, investors are underwriting a continuation of mid-single-digit sales growth and high-single- to low-double-digit EPS growth, consistent with the current ~15% earnings growth indicator.

Competitive Landscape

CCEP operates in a concentrated and structurally advantaged segment of the beverage market, but faces competition across several dimensions: other Coca-Cola bottlers, Pepsi’s system, and broader non-alcoholic beverage players.

Key competitors include:

• Coca-Cola FEMSA (KOF): The largest Coca-Cola bottler in Latin America, KOF provides an emerging-markets counterpart to CCEP’s developed-market exposure. KOF may offer higher growth potential but with greater FX and macro volatility. CCEP’s advantage lies in its more stable, higher-income markets and generally stronger pricing power; KOF may benefit from faster volume growth.
• Coca-Cola HBC (CCH LN): A major Coca-Cola bottler in Central and Eastern Europe and parts of Africa, Coca-Cola HBC competes with CCEP for investor capital as another pure-play Coca-Cola system bottler. CCH has more exposure to faster-growing but less mature markets, whereas CCEP is more focused on Western Europe and Asia-Pacific. CCEP’s margins (~12.9% operating, ~16.3% EBITDA) and ROE (~17.9%) are broadly competitive within the bottler universe, reflecting similar scale benefits.
• PepsiCo (PEP): While structurally different (integrated branded beverages and snacks), PepsiCo is CCEP’s primary competitor at the shelf level in nearly every category. PEP benefits from a more diversified product mix and distribution network, but CCEP’s exclusive rights to the Coca-Cola portfolio in its territories allow it to maintain strong category positions, especially in colas and sparkling soft drinks.
• Keurig Dr Pepper (KDP): KDP competes primarily in North America but serves as a benchmark for beverage system economics—blending concentrate, bottling, and at-home consumption (Keurig platform). KDP’s model highlights the value of system control and direct consumer relationships; CCEP’s focus is more on traditional retail and away-from-home channels.
• Monster Beverage (MNST): In energy drinks, Monster is a major competitor and also a key partner for the Coca-Cola system in various markets. Growth in energy categories benefits CCEP when it acts as bottler/distributor, but intensifying competition (including from local and private-label brands) keeps pressure on brand investment and shelf space.

Within this peer set, CCEP’s investment case centers on:

• Scale and territorial exclusivity in developed markets, ensuring bargaining power with retailers and logistical efficiency.
• Strong franchise alignment with The Coca-Cola Company, providing access to marketing support, brand equity, and innovation pipelines.
• Resilient cash flow and attractive ROE, although partially driven by leverage (debt-to-equity ~141%).

Key Risks and Considerations

Beyond the broad risk bullets in the frontmatter, investors should weigh:

• Leverage and interest-rate sensitivity: With a debt-to-equity ratio of ~141% and a current ratio of 0.83, CCEP is reliant on consistent cash flows and favorable credit markets. Rising rates or tightening credit conditions could weigh on net income and constrain capital return plans.
• Regulatory and ESG pressures: Sugar taxes, plastic-packaging regulations, and climate-related targets may require incremental capex, reformulation, or price actions, all of which could affect margins and volume growth.
• Consumer health trends: The secular shift away from sugary carbonated soft drinks could pressure legacy volumes; success in no/low-sugar, water, energy, and functional beverages is critical to sustaining the current ~4.5% revenue growth.
• Macro exposure: While the category is defensive, away-from-home channels (restaurants, entertainment, travel) are still sensitive to economic slowdowns and shocks, as highlighted by historical EPS volatility and large negative surprises (e.g., –69.3% EPS surprise in 2020).

Overall, CCEP represents a relatively stable, income- and cash-flow-oriented equity within the global beverage universe, suitable for investors comfortable with moderate growth, structural leverage, and the regulatory overhang inherent to sugary beverages and packaging-intensive consumer goods.