Dr Pepper Snapple Group Rallies Despite Industry Woes

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What's not to like about a stock rising in heavy volume with a dividend yield of 3.2% and annual return on equity and profit margin at multi-year highs? That's what you have withDr Pepper Snapple Group ( DPS ).

In addition to the company's flagship Dr Pepper and Snapple brands, its portfolio also includes such popular brands as 7UP, A&W, Sunkist soda, Canada Dry, Schweppes and Squirt, among others.

Earlier this month, the company inked a deal withBuffalo Wild Wings ( BWLD ) that will bring Dr Pepper to all of Buffalo Wild Wings' fountains.

The stock just recently climbed above its all-time high of 50.37, set back in May. Big buyers have been coming into the stock lately in spades. Heading into Tuesday, the stock showed nine straight gains in above-average volume. So what's been fueling the buying? A big earnings beat earlier this month had something to do with it.

Earnings growth accelerated from the third quarter, rising 18% to 97 cents a share, well above the Thomson/Reuters consensus estimate of 85 cents a share. The results were less impressive on the sales front. Revenue fell 1% from a year ago to $1.46 billion. Bottler case sales ( BCS ) fell 2% in the quarter, with both carbonated soft drinks and noncarbonated beverages declining 2%.

Make no mistake. The beverage market remains challenging for Dr Pepper Snapple Group and competitors such as Coke and Pepsi. According to a recent report from Beverage Digest, per-capita soda consumption in the U.S. has been slipping steadily since 1998 as consumers have turned to healthier lifestyles. That said, Dr Pepper is trying to spur growth with a new lineup of 10-calorie sodas.

Ahead of its fourth-quarter results, the company raised its quarterly dividend to 41 cents a share from 38 cents.

The dividend is payable on April 4 to shareholders of record March 17.



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: Personal Finance , Investing Ideas

Referenced Stocks: DPS , BWLD , BCS

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