NEW YORK (TheStreet) -- Shares of Dr. Pepper Snapple Group Inc. (DPS) are lower by -0.93% to $58.77 in pre-market trading this morning following a ratings downgrade to "neutral" from "buy" at Citigroup (C).
The firm said it reduced its rating on the beverage company based on its poor earnings outlook.
Citi kept its $61 price target on the stock.
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Separately, 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 their 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 solid stock price performance, growth in earnings per share, increase in net income, revenue growth and notable return on equity. 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:
- Powered by its strong earnings growth of 52.94% and other important driving factors, this stock has surged by 29.12% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DPS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- DR PEPPER SNAPPLE GROUP INC reported significant earnings per share improvement 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 $3.06 versus $2.96 in the prior year. This year, the market expects an improvement in earnings ($3.46 versus $3.06).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Beverages industry average. The net income increased by 46.2% when compared to the same quarter one year prior, rising from $106.00 million to $155.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 2.5%. Since the same quarter one year prior, revenues slightly increased by 1.3%. 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.
- You can view the full analysis from the report here: DPS Ratings Report
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