Analysts See Dr Pepper Snapple Earnings Bubbling Up


Dr Pepper Snapple Group ( DPS ) will report earnings before the market opens April 23, and analysts expect an 11% year-over-year gain to 59 cents a share.

The Plano, Texas-based beverage company is a mature company and a slow grower, but offers an above-average and growing dividend.

Dr Pepper Snapple has more than 50 brands. In addition to the flagship brands, it has 7UP, A&W, Canada Dry, Clamato, Crush and Hawaiian Punch.

Over the last two quarters, EPS has risen 11% and 18%, but sales growth has been flat. The company has a five-year annualized EPS growth rate of 13%, but the equivalent sales growth rate is only 2%. Analysts expect earnings to grow 7% this year and 6% next year.

The five-year Earnings Stability Factor is 5 on a 0 to 99 scale where low numbers correspond to steady growth.

The return on equity is an impressive 29%, well above the 17% benchmark. The pretax margin is 17%. The debt-to-equity ratio is 110%.

The company has a long and colorful history. A Waco, Texas, pharmacist, Charles Alderton, invented Dr Pepper in 1885 and served it in his drug store. It was originally called a Waco, but was later named after Alderton's friend, Dr. Charles Pepper.

The Snapple drinks were first sold in New York health clubs in the 1970s. Both brands were ultimately acquired by British-based confectionery company Cadbury Schweppes, combined into a North American operation and spun off as a separate company in 2008.

Dr Pepper Snapple has raised its dividend each year, starting out with a 15-cent-per-share quarterly payout, which was raised to 41 cents this year. That works out to a 3.2% annual yield and a three- to five-year dividend growth rate of 18%.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Investing Ideas

Referenced Stocks: DPS

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