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Beverage Stocks to Report Q4 Earnings on Feb 14: TAP, DPS

We are in the middle of the Q4 earnings season and investors seem to be happy with the way the quarter has fared. The quarter's results are in line to record the best performance in the last eight quarters. At present, sectors including finance, technology, construction, utilities, and business services look promising and are delivering improved growth.

However, the pace of growth is currently modest and positive earnings surprises are not clearly visible. Nevertheless, it is better than the historical levels.

On summarizing the performance of the 358 S&P 500 members that have reported financial results as of Feb 10, we see that total earnings of these companies were up 6.1% on a year-over-year basis (69.0% of the companies beat EPS estimates) while total revenue increased 4.6% (54.7% beat top-line expectations).

Per the Zacks Earnings Trend , overall fourth-quarter earnings for the S&P 500 companies are anticipated to be up 7.5% from the year-ago quarter on a 3.9% rise in revenues.

The performance of the S&P 500 index is not restricted to a single sector, and of the 16 Zacks sectors, the Consumer Staples sector is showing positive signs with total earnings expected to grow 10.6%, while revenues are anticipated to increase 4.1%. As of Feb 10, 71.9% of the total number of S&P 500 companies in this sector has reported their results. Out of these, 60.9% companies posted an earnings beat (growing 9.4% year over year), while 39.1% surpassed revenue estimates (increasing 2.8% year over year).

Beverage Stocks form part of the Consumer Staples sector. Leading firms from the industry have posted mixed results in the quarter. The Coca-Cola Company KO reported better-than-expected results in the fourth-quarter 2016. Premium branded spirits company Castle Brands Inc.'s ROX earnings in the third-quarter fiscal 2017 were in line with the Zacks Consensus Estimate. Revenues however missed the Zacks Consensus Estimate.

So, let's see what awaits the following beverage stocks that are queued up for fourth-quarter 2016 earnings releases on Feb 14.

Molson Coors Brewing CompanyTAP is slated to release fourth-quarter 2016 results on Feb 14, before the market opens. Last quarter, this beverage company posted a positive earnings surprise of 1.98%. It should be noted that the company has posted two positive and two negative earnings surprises in the last four quarters, resulting in an average positive surprise of 4.79%.

The company has an Earnings ESP of 7.96% and a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Our proven model does not conclusively show that Molson Coors is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 (Buy) or 3 (Hold) for this to happen. The company has a positive ESP, which increases the predictive power of earnings beating estimates. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Despite a modest recovery in the macroeconomic scenario, the company witnessed a year-over-year decline in earnings and revenues throughout 2015, as well as in all the three quarters of 2016 due to weak volumes in the major markets of Canada, the U.S. and Europe over the past several quarters. Estimates have also declined over the past 60 days.

Tough macroeconomic conditions and competitive pressure have also remained headwinds for Molson Coors. The company remains apprehensive about the fourth quarter and expects weak volumes to hinder growth.

The company is therefore focusing on improved marketing strategies for beers and targeting the above-premium brands to boost its market share. The company's recent acquisition of 58% stake in MillerCoors, cost savings efforts and marketing investments are encouraging. (Read: Is Molson Coors Likely to Disappoint in Q4 Earnings? ).

Though Molson Coors' shares have increased 14.1% in comparison to the Zacks categorized Beverages-Alcohol industry's growth of 5.3% over the past one year, the industry is part of the top 37% of the Zacks Classified industries (98 out of the 265).

Dr. Pepper Snapple Group, Inc.DPS is set to report fourth-quarter 2016 results on Feb 14, before the market opens. Last quarter, this Texas-based beverage company posted a positive surprise of 5.41%. It also has an impressive earnings history. The company surpassed estimates in the trailing four quarters, resulting in an average positive surprise of 5.45%.

Dr Pepper Snapple currently has an Earnings ESP of +1.89% and a Zacks Rank #4. The company is well-positioned for sustainable growth owing to a major shift in consumer preferences. The company's innovation and marketing efforts will help it to improve the flexibility of core soda brands. However, currency headwinds and increased marketing expenses are expected to hurt profits in the fourth quarter. (Read: What's in Store for Dr Pepper Snapple in Q4 Earnings? ).

Dr. Pepper Snapple's shares have increased by 1.7% over the past one year in comparison to the Zacks categorized Beverages-Alcoholic industry, which recorded a decline of 1.3%.

Stay tuned! Check later on our full write-up on earnings releases of these stocks.

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Molson Coors Brewing Company (TAP): Free Stock Analysis Report

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Dr Pepper Snapple Group, Inc (DPS): Free Stock Analysis Report

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


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

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