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Dr Pepper Snapple Group Inc. (DPS - Analyst Report) is set to report first quarter 2013 results on Apr 24. Last quarter it posted a 4.71% negative surprise. Let’s see how things are shaping up for this announcement.
Factors in this Past Quarter
Dr Pepper posted dismal results for the fourth quarter of 2012, missing the Zacks Consensus Estimates for both revenues and earnings. Earnings declined year over year as decent sales growth was offset by weak profits.
During the fourth quarter, Dr Pepper's net sales grew 2% year over year as gains from price/mix and currency were offset by lower volumes. Sales volume was down due to declines in the Beverage Concentrates and Packaged Beverages segments. Overall, sales were down from both the second and third quarter levels.
Adjusted operating income declined in the quarter due to planned increase in labor and benefits. Operating income was also hurt due to higher cost of apples used in Mott’s apple juice.
Our proven model does not conclusively show that Dr Pepper is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Negative Zacks ESP: This is because the Most Accurate Estimate stands at 46 cents while the Zacks Consensus Estimate is at 47 cents. That is a difference of -2.13%.
Zacks Rank #4 (Sell): Dr Pepper carries Zacks Rank #4 (Sell). We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies from the consumer staple sector you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Flower Foods Inc (FLO - Snapshot Report), Earnings ESP of +4.88% and Zacks Rank #1 (Strong Buy).
The Hillshire Brands Co. (HSH - Snapshot Report), Earnings ESP of +18.75% and Zacks Rank #2 (Buy).
Molson Coors Brewing Co. (TAP - Analyst Report), Earnings ESP of +2.86% and Zacks Rank #3 (Hold).