Why Dr Pepper Snapple’s Earnings Fell in 3Q17
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.
Interested in DPS? Don't miss the next report.
Receive e-mail alerts for new research on DPS
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.
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.