Update (9:45 a.m.): Updated with Tuesday market open information.
NEW YORK (TheStreet) -- Wells Fargo downgraded Dr. Pepper Snapple Group (DPS) to "underperform" from "market perform" and reduced its estimates. The firm cited increased competition as the reason for the move.
The stock was down 1.55% to $52.85 at 9:45 a.m. on Tuesday.Must Read: Warren Buffett's 10 Favorite Growth Stocks
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 reasonable valuation levels, good cash flow from operations, expanding profit margins, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has increased to $250.00 million or 28.86% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -5.32%.
- DR PEPPER SNAPPLE GROUP INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. 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 ($3.41 versus $3.06).
- The gross profit margin for DR PEPPER SNAPPLE GROUP INC is rather high; currently it is at 61.79%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 10.66% trails the industry average.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: DPS Ratings Report