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3 Reasons Why Dr. Pepper Snapple Group (DPS) Could Be Poised To Beat Earnings

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Dr. Pepper Snapple Group (DPS - Free Report) is one of the largest beverage companies in America. The company manufactures, markets, and distributes more than 50 brands of carbonated soft drinks, juices and mixers across the United States, Canada, Mexico, and the Caribbean. Furthermore, Dr. Pepper is expected to release its quarterly earnings report before the market opens on July 27.

Dr. Pepper currently sports a Zacks Rank #3 (Hold) and has defeated its earnings estimates in sixteen of its past seventeen operational quarters dating back to 2013, including a beat last quarter of 5.21%. Furthermore, Dr. Pepper operates in the Soft Drink Beverages industry, which sits in the top 9% on the Zacks Industry Rank.

Dr. Pepper possesses a stable Zacks Rank, an Earnings ESP of 0.78%, and strong earnings beat history, which should provide investors a sense of confidence as we approach its report date.

If that’s not enough, here are 3 additional reasons to be bullish on Dr. Pepper before its earnings report is released:

1.       Strong Growth Metrics

Even though the company holds just a “C” grade for Growth in our Style Scores System, Dr. Pepper possesses a number of impressive growth indicators. For example, Dr. Pepper features a net margin of 13.03% and RoE of 37.79%, both of which tower over the industry averages of -0.81% and 8.64%, respectively. Furthermore, Dr. Pepper’s historical cash flow growth of 4.55% bests the industry average of 2.57%.

Additionally, Dr. Pepper shows positive growth trends in sales and earnings, especially for an already massive company. Our Zacks Consensus Estimate projects revenues for Dr. Pepper of $1.77 billion, which would represent 4.28% year-over-year growth. Also, the Zacks Consensus Estimate projects earnings of $1.28 per share, which would be good for a steady 2.50% year-over-year growth.

2.       Commitment to Drive Sales

The company expects the performance of its newly acquired Bai Brands to increase sales due to its presence across several categories, including enhanced water, carbonated flavored water and coconut water. Dr. Pepper plans to make major marketing investments in Bai in the second and third quarter of 2017, which will help the company strengthen its grip in the noncarbonated beverage space.

Also, the company continues to carry out aggressive marketing programs and strong activation in stores. Its plan includes increasing distribution and availability of key brands, with an added focus on high-margin channels. Overall, the company regularly develops brand extensions of innovative products to meet evolving consumer trends.

3.       Impressive Growth in Vital Areas

Dr. Pepper is projected to witness sales growth in many key divisions of the company. According to our consensus estimate, Dr. Pepper’s beverage concentrates division is expected to post 2.3% year-over-year growth, bringing its quarterly sales total to around $350 million. Furthermore, the company’s packaged beverages division is projected to post 6% year-over-year growth, which would bring its sales total to around $1.3 billion. 

Also, our consensus estimate projects Dr. Pepper’s operating profit for its packaged beverages segment to demonstrate strong year-over-year growth of 5.5%, as its profit figure reaches close to $221 million.  

These consensus estimates are from our exclusive non-financial metrics estimate file. These estimates are updated daily and are based on the independent research of expert stock analysts. Learn more here>>>

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