Dr Pepper Snapple Group Inc
(
DPS
) is set to report fourth quarter 2012 results on Feb 13. Last
quarter it posted a 2.60% positive surprise. Let's see how things
are shaping up for this announcement.
Growth Factors this Past Quarter
Though the company reported decent earnings growth in the
third quarter, sales growth was flat year over year and declined
sequentially. Sales were once again hurt by volume headwinds,
which offset pricing gains. Management commented that the volume
decline was mainly due to stronger year-ago comparisons, which
included heavy pricing and promotional activity that were not
repeated in this quarter. Moreover, though the company maintained
its full year 2012 earnings guidance, it trimmed the sales
outlook due to weaker-than-expected volume growth. Commodity
costs are also expected to increase in the fourth quarter due to
higher costs of apples used in Mott's juice.
Earnings Whispers?
Our proven model does not conclusively show that Dr Pepper is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here as you will see below.
Negative Zacks ESP
: The Earnings ESP is -1.18%. That is because the Most Accurate
Estimate stands at 84 cents while the Zacks Consensus Estimate is
higher at 85 cents. That is a difference of -1.18%.
Zacks #3 Rank (Hold):
Dr. Pepper's Zacks Rank #3 (Hold) lowers the predictive power of
ESP because the Zacks Rank #3 when combined with a negative ESP
makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and #5 (Sell
rated stocks) going into the earnings announcement, especially
when the company is seeing negative estimate revisions
momentum.
Dr Pepper has seen a downward pressure on estimates in the
past two months. This may be due to persistent weakness seen in
the overall carbonated soft drinks' (CSD) volumes in North
America since the past few months. Changing consumer preferences,
increasing health consciousness and growing regulatory pressures
are affecting beverage sales. This is hurting CSD volumes for Dr
Pepper as well as other beverage companies like
The Coca-Cola Company
(
KO
).
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows they have the right combination of elements to post
an earnings beat this quarter:
Coca-Cola FEMSA S.A.B de C.V
. (
KOF
), with Earnings ESP of +7.87% and a Zacks Rank #2 (Buy)
Kellogg Company
(
K
), with an Earnings ESP of +0.97% and a Zacks Rank #2 (Buy)
DR PEPPER SNAPL (DPS): Free Stock Analysis
Report
KELLOGG CO (K): Free Stock Analysis Report
COCA COLA CO (KO): Free Stock Analysis Report
COCA-COLA FEMSA (KOF): Free Stock Analysis
Report
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