A month has gone by since the last earnings report for Dr Pepper Snapple Group, Inc . Shares have added about 3.6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Dr Pepper Snapple Q4 Earnings Lag, Revenues in Line
Earnings in Details
Fourth-quarter adjusted earnings per share (EPS) of $1.04 missed the Zacks Consensus Estimate of $1.06 by 1.9%. However, earnings increased 4% year over year, courtesy of strong top-line growth.
Revenues
Dr Pepper Snapple’s net sales of $1.578 billion were almost in line with the Zacks Consensus Estimate of $1.577 billion. Net sales rose 2.1% year over year as favorable product/package mix, price hikes and sales volume offset currency headwinds.
While sales were driven by 1% volume growth, currency hurt sales by 1%.
Operating Highlights
Adjusted operating income of $327 million declined from $329 million a year ago. Adjusted operating margin dropped 60 basis points to 20.7%.
Volume Details
Dr Pepper Snapple’s sales volume is measured in two ways: 1) sales volume and 2) bottler case sales (BCS) volume. Sales volume represents concentrates and finished beverages sold to bottlers, retailers and distributors. BCS includes the sale of finished packaged beverages by the company and its bottlers to retailers and independent distributors.
Sales volume increased 1% in the quarter, same as the previous quarter.
In the quarter, BCS volumes were flat versus 2% growth in the previous quarter. During the quarter, Carbonated Soft Drinks (CSDs) volumes increased 1% and non-carbonated beverages (NCBs) volumes decreased 1%.
Geographically, the U.S. and Canada volumes were flat, softer than 1% growth witnessed in the last quarter. Meanwhile, volumes increased 5% in Mexico and the Caribbean, higher than the previous quarter level of 4%.
Segment Details
Beverage Concentrates: Dr Pepper's net sales from Beverage Concentrates inched up 4.4% year over year driven by favorable product mix, lower discounts, a 1% increase in concentrate shipments and concentrate price increases. Volumes rose 1%.
Segment operating profit increased 7%, as net sales growth offset higher marketing expenses.
Packaged Beverages: In the Packaged Beverages segment, net sales rose 2.5% due to favorable product/package mix and price hikes. Volumes were flat in the quarter.
Segment operating profit decreased 3% due to an increase in certain operating expenses, including $4 million of health and welfare and insurance costs and additional frontline labor costs focused on driving better execution. Operating profit was further affected by an $8 million increase in planned marketing investments.
Latin America Beverages: Dr Pepper's net sales from Latin America Beverages declined 8.5% due to currency headwinds.
Segment operating profit was flat as the segment incurred $8 million of higher U.S. dollar denominated input costs which caused a 40% decline in operating profits.
Financials
Cash and cash equivalents were $1,787 million as of Dec 31, 2016, up from $911 million at 2015-end. Long-term obligations were $4,468 million, up from $2,875 million at 2015-end.
In 2016, net cash provided by operating activities totaled $939 million, down 5.2% year over year.
Free cash flow came in at $759 million in 2016, down 6.5%.
2017 Outlook
Dr Pepper expects core earnings in the range of $4.44 to $4.54 per share. Currency headwinds are expected to hurt 2017 core EPS by $0.11.
The company expects net sales growth of 4.5%. Currency is likely to have a negative impact of about 1% on sales.|
Organic volume is expected to witness approximately 1% growth, while total volume growth will likely be close to 2% (inclusive of the Bai acquisition, which closed on Jan 31, 2017).
Capital expenditure is expected to be nearly 3% of net sales. The company plans to repurchase $450 million to $500 million of shares in the year.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Dr Pepper Snapple's stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
Image: Bigstock
Why Is Dr Pepper Snapple (DPS) Up 3.6% Since the Last Earnings Report?
A month has gone by since the last earnings report for Dr Pepper Snapple Group, Inc . Shares have added about 3.6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Dr Pepper Snapple Q4 Earnings Lag, Revenues in Line
Earnings in Details
Fourth-quarter adjusted earnings per share (EPS) of $1.04 missed the Zacks Consensus Estimate of $1.06 by 1.9%. However, earnings increased 4% year over year, courtesy of strong top-line growth.
Revenues
Dr Pepper Snapple’s net sales of $1.578 billion were almost in line with the Zacks Consensus Estimate of $1.577 billion. Net sales rose 2.1% year over year as favorable product/package mix, price hikes and sales volume offset currency headwinds.
While sales were driven by 1% volume growth, currency hurt sales by 1%.
Operating Highlights
Adjusted operating income of $327 million declined from $329 million a year ago. Adjusted operating margin dropped 60 basis points to 20.7%.
Volume Details
Dr Pepper Snapple’s sales volume is measured in two ways: 1) sales volume and 2) bottler case sales (BCS) volume. Sales volume represents concentrates and finished beverages sold to bottlers, retailers and distributors. BCS includes the sale of finished packaged beverages by the company and its bottlers to retailers and independent distributors.
Sales volume increased 1% in the quarter, same as the previous quarter.
In the quarter, BCS volumes were flat versus 2% growth in the previous quarter. During the quarter, Carbonated Soft Drinks (CSDs) volumes increased 1% and non-carbonated beverages (NCBs) volumes decreased 1%.
Geographically, the U.S. and Canada volumes were flat, softer than 1% growth witnessed in the last quarter. Meanwhile, volumes increased 5% in Mexico and the Caribbean, higher than the previous quarter level of 4%.
Segment Details
Beverage Concentrates: Dr Pepper's net sales from Beverage Concentrates inched up 4.4% year over year driven by favorable product mix, lower discounts, a 1% increase in concentrate shipments and concentrate price increases. Volumes rose 1%.
Segment operating profit increased 7%, as net sales growth offset higher marketing expenses.
Packaged Beverages: In the Packaged Beverages segment, net sales rose 2.5% due to favorable product/package mix and price hikes. Volumes were flat in the quarter.
Segment operating profit decreased 3% due to an increase in certain operating expenses, including $4 million of health and welfare and insurance costs and additional frontline labor costs focused on driving better execution. Operating profit was further affected by an $8 million increase in planned marketing investments.
Latin America Beverages: Dr Pepper's net sales from Latin America Beverages declined 8.5% due to currency headwinds.
Segment operating profit was flat as the segment incurred $8 million of higher U.S. dollar denominated input costs which caused a 40% decline in operating profits.
Financials
Cash and cash equivalents were $1,787 million as of Dec 31, 2016, up from $911 million at 2015-end. Long-term obligations were $4,468 million, up from $2,875 million at 2015-end.
In 2016, net cash provided by operating activities totaled $939 million, down 5.2% year over year.
Free cash flow came in at $759 million in 2016, down 6.5%.
2017 Outlook
Dr Pepper expects core earnings in the range of $4.44 to $4.54 per share. Currency headwinds are expected to hurt 2017 core EPS by $0.11.
The company expects net sales growth of 4.5%. Currency is likely to have a negative impact of about 1% on sales.|
Organic volume is expected to witness approximately 1% growth, while total volume growth will likely be close to 2% (inclusive of the Bai acquisition, which closed on Jan 31, 2017).
Capital expenditure is expected to be nearly 3% of net sales. The company plans to repurchase $450 million to $500 million of shares in the year.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Dr Pepper Snapple Group, Inc Price and Consensus
Dr Pepper Snapple Group, Inc Price and Consensus | Dr Pepper Snapple Group, Inc Quote
VGM Scores
At this time, Dr Pepper Snapple's stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.