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Dr Pepper's (DPS) Q4 Earnings Meet, Revenues Lag Estimates

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Dr Pepper Snapple Group Inc.’s fourth-quarter earnings remained in line with the Zacks Consensus Estimate while revenues lagged the same.

Recently, the company reported its acquisition agreement with the well-known coffee maker Keurig Green Mountain, Inc. Per the terms of the transaction, Dr Pepper will be acquired by Keurig and the company’s shareholders will receive a special cash dividend of $130.75 per share, making the deal worth $18.7 billion.

Dr Pepper’s shareholders will retain 13% ownership of the combined entity, while Keurig shareholders will own the remaining 87%. The transaction is scheduled to close in the second quarter of 2018.

Shares of Dr Pepper rallied 22.2% in the past year, outperforming the industry’s gain of 8.7%.

Quarterly Highlights

In the fourth quarter, adjusted earnings per share of $1.17 grew 12.5% year over year. Net sales of $1.64 billion missed the consensus estimate of $1.66 million by 1.2% but rose 4.1% from the year-ago quarter.

Gross profit of $980 million was up 3% from the prior-year quarter.

Dr Pepper Snapple Group, Inc Price, Consensus and EPS Surprise

2017 Results

For 2017, net sales were $6.7 billion, up 3.9% from the prior year. Net sales increased due to favorable product and package mix.

Gross Profit increased 3.6% year over year to nearly $4 billion in the quarter. Net income also rose 27% from the year-ago quarter to $1.1 billion.

The company reported adjusted earnings per share of $5.89 in 2017, an increase of 29.7% from the prior year.

Let’s delve deeper into the numbers.

Volume Details

Dr Pepper’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.

In 2017, BCS volumes increased 1% year over year. In the United States and Canada, volume was 1% higher, and in Mexico and Caribbean, volume increased 3% compared with the prior year. Branded CSD volume was up 1%, while NCB volume increased 4% from the prior-year quarter.

Segment Detail

Beverage Concentrates segment revenues were up 3.7% year over year on higher pricing, a 2% increase in concentrate case sales and lower discounts.

Packaged Beverage segment sales increased 3.7% from the prior year on favorable product and package mix.

Latin America Beverage segment revenues also increased 5.9% year over year owing to increased sales volume and higher pricing, partially offset by unfavorable package and product mix, and unfavorable foreign currency translation.


Cash and cash equivalents were $158 million as of Dec 31, 2017, compared with $1,787 million at 2016-end. Long-term obligations totaled $4.4 billion in 2017, slightly lower than $4.5 billion in 2016.

Capital Expenditures were $202 million in 2017, compared with $180 million in 2016.

Net cash provided by operating activities totaled nearly $1 billion in 2017, up 8% year over year.

The company declared aggregate dividends per share of $2.32 in 2017 compared with $2.12 in 2016.

Zacks Rank & Peer Release

Dr Pepper carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

PepsiCo (PEP - Free Report) recently reported fourth-quarter 2017 earnings per share of $1.31 that beat the Zacks Consensus Estimate of $1.30 and increased 9% year over year.

Upcoming Peer Releases

Coca-Cola (KO - Free Report) is scheduled to report fourth-quarter numbers on Feb 16, 2018. The company’s earnings for 2018 are expected to grow 6%.

Monster Beverage (MNST - Free Report) is expected to report fourth-quarter results on Mar 7, 2018. Earnings for 2018 is projected to increase 24.7%.

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