CCEP Earnings: Innovation and In-Market Execution Buoy Profit Growth; Shares Remain Overvalued

Narrow-moat Coca-Cola Euro-Pacific Partners posted solid first-half results, with revenue in constant currency up 3.5% and adjusted operating profits up 9%. Pricing rose 2.9% thanks to favorable product mix and in-market execution, while volume held up (up 0.6%) on strong performance in the Philippines, which more than offset soft European volumes due to poor weather and persistent macro headwinds. Management reaffirmed 2024 guidance for constant-currency comparable sales and operating profits to grow 4% and 7%, respectively, which we view as attainable. We're maintaining our estimates for mid-single-digit annual sales growth and operating margins averaging 14% over the five-year forecast horizon, and our fair value estimates of EUR 56 and $60 remain in place. Shares look overvalued.