With EPS Growth And More, Coca-Cola Europacific Partners (AMS:CCEP) Makes An Interesting Case

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Coca-Cola Europacific Partners (AMS:CCEP). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Coca-Cola Europacific Partners with the means to add long-term value to shareholders.

Check out the opportunities and risks within the XX Beverage industry.

Coca-Cola Europacific Partners' Earnings Per Share Are Growing

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. We can see that in the last three years Coca-Cola Europacific Partners grew its EPS by 14% per year. That's a good rate of growth, if it can be sustained.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. The good news is that Coca-Cola Europacific Partners is growing revenues, and EBIT margins improved by 2.3 percentage points to 12%, over the last year. Ticking those two boxes is a good sign of growth, in our book.

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

Fortunately, we've got access to analyst forecasts of Coca-Cola Europacific Partners' future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Coca-Cola Europacific Partners Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

The good news is that Coca-Cola Europacific Partners insiders spent a whopping €1.3m on stock in just one year, without so much as a single sale. Knowing this, Coca-Cola Europacific Partners will have have all eyes on them in anticipation for the what could happen in the near future. It is also worth noting that it was CEO & Executive Director Damian Gammell who made the biggest single purchase, worth €913k, paying €45.89 per share.

The good news, alongside the insider buying, for Coca-Cola Europacific Partners bulls is that insiders (collectively) have a meaningful investment in the stock. As a matter of fact, their holding is valued at €29m. That's a lot of money, and no small incentive to work hard. While their ownership only accounts for 0.1%, this is still a considerable amount at stake to encourage the business to maintain a strategy that will deliver value to shareholders.

Is Coca-Cola Europacific Partners Worth Keeping An Eye On?

One positive for Coca-Cola Europacific Partners is that it is growing EPS. That's nice to see. On top of that, we've seen insiders buying shares even though they already own plenty. That makes the company a prime candidate for your watchlist - and arguably a research priority. You still need to take note of risks, for example - Coca-Cola Europacific Partners has 2 warning signs we think you should be aware of.

Keen growth investors love to see insider buying. Thankfully, Coca-Cola Europacific Partners isn't the only one. You can see a a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.