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Dr Pepper Snapple Disappoints Investors with 3Q17 Results

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Part 2
Dr Pepper Snapple Disappoints Investors with 3Q17 Results PART 2 OF 7

Why Dr Pepper Snapple’s Earnings Fell in 3Q17

Disappointing earnings

In 3Q17, Dr Pepper Snapple (DPS) missed analysts’ earnings estimates for the second consecutive quarter. Its adjusted EPS (earnings per share) of $1.10 lagged the consensus analyst estimate of $1.16. Its adjusted EPS fell ~6.0% on a year-over-year basis.

Why Dr Pepper Snapple’s Earnings Fell in 3Q17

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Why earnings fell

The 6.0% fall in Dr Pepper Snapple’s 3Q17 adjusted EPS compares to its flat EPS growth in 2Q17 and its 8.3% rise in 3Q16.

The hurricanes in the United States and the earthquakes in Mexico adversely impacted the company’s 3Q17 adjusted EPS by $0.02. It was also affected by a $0.02 loss related to a write-off of prepaid resin inventory.

PepsiCo (PEP) delivered better earnings growth than Dr Pepper Snapple and Coca-Cola (KO) in the third quarter. PepsiCo’s adjusted EPS rose 5.7% on a year-over-year basis to $1.48 in fiscal 3Q17, driven by an operating margin expansion and a lower effective tax rate. Coca-Cola’s adjusted EPS rose 2.0% to $0.50 in 3Q17, driven by a higher operating margin.

Updated guidance

Dr Pepper Snapple now expects adjusted EPS of $4.50–$4.57 in 2017. It expects the recent hurricanes and earthquakes to reduce its 2017 adjusted EPS by $0.02. The Bai Brands acquisition is expected to be $0.11 dilutive to the company’s 2017 adjusted EPS compared to the previous dilution expectation of $0.07. Adverse currency fluctuations are expected to impact its 2017 adjusted EPS by $0.02.

We’ll take a look at growth in the company’s 3Q17 sales in the next part of this series.

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