Despite higher revenue, Dr Pepper Snapple’s (DPS) gross margin declined in 1Q15 to 58.5%—from 60.4% in the same quarter last year.
Dr Pepper Snapple’s (DPS) 1Q15 net sales increased by 3.8% to $1.5 billion. The company was ahead of consensus Wall Street analysts’ estimates of $1.4 billion.
Dr Pepper Snapple (DPS) reported results for 1Q15 ending March 31, 2015 on April 23. The company’s 1Q15 adjusted EPS was $0.81—ahead of analysts’ estimates.
Consumers moved away from diet sodas due to health concerns regarding the artificial sweeteners in the drinks.
Pepsico’s (PEP) Frito-Lay division continued to perform well in 1Q15. In recent years, PepsiCo’s snack division performed better than the beverage business.
PepsiCo’s gross margins increased in 1Q15. Its operating margins improved by 40 basis points to 14.7% in 1Q15 from 14.3% in the same quarter last year.
PepsiCo’s 1Q15 adjusted EPS (earnings per share) excludes the impact of one-time items. It increased to $0.83—compared to $0.81 in 1Q14.
PepsiCo’s (PEP) first quarter revenue declined by 3.2% from the same quarter last year, due to the strengthening of the dollar against major foreign currencies.
Coca-Cola is accelerating the refranchising of its bottling operations, with the goal to hand back about two-thirds of its US bottler–delivered business by the end of 2017.
Coca-Cola’s gross margin in 1Q15 improved to 61.7% from 61.4% in 1Q14, due to favorable pricing and moderately lower commodity costs.
Coca-Cola’s North America segment’s 1Q15 revenue increased by 6.4% to $5.1 billion, compared to the same quarter in the previous year.
Coca-Cola’s 1Q15 adjusted earnings per share increased by 9.1% to $0.48, from the comparable quarter in the previous year.
Revenue for Coca-Cola in 1Q15 increased to $10.7 billion, compared with $10.6 billion in the first quarter of last year.
The ill effects of sugary drinks are moving consumers away from soda drinks to healthier options. This is unfavorable for Dr Pepper Snapple with 80% in CSD volumes.
Dr Pepper Snapple’s valuation has been revised upward. As of April 17, it’s trading at a forward PE ratio of 19.6x, up 6.7% since the beginning of 2015.
Analysts expect Dr Pepper Snapple’s margins to be 59.9% in 1Q15, up from 58.2% in 1Q14. The company expects operating margins to be adversely impacted by some headwinds.
The consensus Wall Street analysts’ estimate for Dr Pepper Snapple’s 1Q15 adjusted EPS is $0.76. The estimate for full year 2015 adjusted EPS currently stands at $3.86.
The impact of currency headwinds was less on Dr Pepper Snapple’s sales than the two beverage giants. It gets 12.4% of net sales from international operations.
PepsiCo (PEP) plans to generate ~$1.0 billion in productivity savings in 2015. The company expects these savings to offset commodity cost inflation.
PepsiCo’s net revenue increased by 0.4% in 2014 to $66.7 billion. Overall, weakening foreign currencies reduced 2014 net revenue by 3.0%.