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Why Dr Pepper Snapple (DPS) Is Up Today

NEW YORK (TheStreet) -- Dr Pepper Snapple (DPS) was gaining 2.8% to $50.28 on Wednesday after its fourth-quarter earnings beat analysts' estimates by 13 cents a share.

The beverage company posted earnings of 97 cents a share for the fourth quarter, compared to the Capital IQ Consensus Estimate of 84 cents a share. Revenue fell 1.4% to $1.46 billion, in line with analysts' estimates of $1.47 billion.

Dr Pepper Snapple said a 4% sales volume decline and less favorable trade adjustments were offset in part by favorable mix and price.

For 2014, Dr Pepper Snapple said it expects earnings of between $3.38 and $3.46 a share. Analysts expect earnings of $3.26 a share for the year. The beverage company expects revenue of between $6 billion and $6.06 billion, compared to analysts' forecasts of $6.12 billion.

Must read: 5 Consumer Goods Stocks Nudging The Sector Higher

TheStreet Ratings team rates DR PEPPER SNAPPLE GROUP INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about its recommendation:

"We rate DR PEPPER SNAPPLE GROUP INC (DPS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, attractive valuation levels, growth in earnings per share and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • DR PEPPER SNAPPLE GROUP INC has improved earnings per share by 20.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DR PEPPER SNAPPLE GROUP INC increased its bottom line by earning $2.96 versus $2.75 in the prior year. This year, the market expects an improvement in earnings ($3.08 versus $2.96).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 2.4%. Since the same quarter one year prior, revenues slightly increased by 1.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Beverages industry and the overall market, DR PEPPER SNAPPLE GROUP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $340.00 million or 11.47% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -6.53%.

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