Leading Australian beverage manufacturer and distributor Coca-Cola Amatil Ltd (ASX: CCL) last week announced important changes to how it will report its full year results.
The group is scheduled to report on 21 August, which gives investors nearly two weeks to adjust their valuation models and consider the new divisional earnings lines.
Here's what you need to know:
Alcohol and Coffee: An Alcohol and Coffee business will be reported that comprises the Grinders coffee business (transferred from Australian Non-Alcohol Beverages) and the Alcohol business (transferred from Alcohol, Food and Services).
Corporate costs: The group will no longer charge a corporate overhead to the segments, but rather corporate costs will be contained within the Food and Services business division.
Indonesian and PNG Non-Alcohol Beverage: To simplify reporting following The Coca-Cola Company taking a 29.4% equity interest in CCA Indonesia, the Indonesia Services business will be consolidated into the Indonesian and PNG Non-Alcohol Beverage unit.
The realignment of the reporting segments makes sense given the evolving nature of Coca-Cola Amatil's business, however it doesn't affect the key focus for shareholders which is bottom line profits.
At the annual general meeting (AGM) held in May (the group operates on a December financial year end), group Managing Director Alison Watkins guided the market's expectations towards "mid single-digit growth in earnings per share over the next few years with no further decline expected after 2014."
Based on data provided by Morningstar, analyst consensus forecasts predict a rise in earnings per share from 49.2 cents per share (cps) in 2014 to 51.1 cps in 2015, 54.6 cps in 2016 and 57.5 cps in 2017.
With the shares recently trading at $9.09, this implies a price-to-earnings ratio of 17.8x in 2015, dropping to 16.6x in 2016 and 15.8x in 2017. For long-term investors, the upcoming report and outlook could represent a major opportunity to determine if now is the time to add this above average quality stock to their portfolio.
