Dr Pepper Snapple Group Inc.
) is set to report its third-quarter fiscal 2013 results on Oct
23 before the market opens. Last quarter, the beverage company
posted in-line results. Let's see how things are shaping up for
Factors to Consider this Quarter
Dr Pepper's top line has been weak since the past 4-5 quarters
due to disappointing volume trends of its carbonated beverages
(CSD). Changing consumer preferences, increasing health
consciousness and rising obesity concerns, possible new taxes on
sugar-sweetened beverages, and growing regulatory pressures have
tremendously pressurized the CSD category in North America. These
category headwinds are significantly affecting Dr Pepper's CSD
volumes, which comprise around 80% of its business.
The situation is not expected to improve much in the third
quarter and CSDs are expected to continue to suffer due to
category headwinds. Though the company's plans to expand the TEN
platform to revive CSD sales look encouraging, we believe it will
take some time to deliver substantial results while impeding
near-term earnings growth.
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
and a Zacks Rank #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 -1.21%. That is because the Most Accurate
estimate stands at 82 cents while the Zacks Consensus Estimate is
higher at 83 cents. That is a difference of -1.91%.
Dr Pepper carries a Zacks Rank #4 (Sell). 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. Estimates for this beverage
company have been declining since the past 30 days.
Other Stocks to Consider
Here are some other companies in the food/beverage sector that
can be considered as our model shows that they have the right
combination of elements to post an earnings beat this
Coca-Cola Enterprises Inc.
), Earnings ESP of +1.25% and Zacks Rank #2 (Buy).
Green Mountain Coffee Roasters Inc.
), Earnings ESP of +4.00% and Zacks Rank #2 (Buy).
Kraft Foods Group Inc
), Earnings ESP of +1.47% and Zacks Rank #3 (Hold).
COCA-COLA ENTRP (CCE): Free Stock Analysis
DR PEPPER SNAPL (DPS): Free Stock Analysis
GREEN MTN COFFE (GMCR): Free Stock Analysis
KRAFT FOODS GRP (KRFT): Free Stock Analysis
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