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Dr Pepper Snapple’s Stock Outperforms Peers in 2015

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Dec. 4 2020, Updated 10:52 a.m. ET

Stock movement in 2015

As of July 24, Dr Pepper Snapple’s (DPS) stock price has appreciated by 8.8% to $77.92 since the beginning of 2015. As we discussed in Parts 1 and 2 of this series, the company beat consensus Wall Street analysts’ earnings and sales expectations in 2Q15. Despite strong results, the company’s stock price fell by 1.9% on July 23, the day the company announced its results for the second quarter of 2015.

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Stock outperforms peers

Dr Pepper Snapple’s stock price appreciation has been higher than its peers. As of July 24, Coca-Coca’s (KO) stock price declined by 4.0% since the beginning of the year. PepsiCo’s (PEP) stock price appreciated by 1.8% over the same period.

Unlike Dr Pepper Snapple, which registered a 1.5% growth in its 2Q15 net sales, both Coca-Cola and PepsiCo have reported a decline in 2Q15 revenue. The strengthening of the US dollar is going against these two behemoths, which have significant exposure to international operations.

Dr Pepper Snapple accounts for ~1.0% of the portfolio holdings of the Consumer Staples Select Sector SPDR Fund (XLP) and 0.1% of the SPDR S&P 500 ETF (SPY).

Dr Pepper Snapple is currently trading at a forward price-earnings (or PE) multiple of 19.0x, up 3.4% since the beginning of the year. The company is trading at a lower valuation compared to the S&P 500 Consumer Staples Index, which is trading at a forward PE of 19.7x. Coca-Cola and PepsiCo are trading at forward PE multiples of 19.9x and 20.4x, respectively.

The road ahead

Dr Pepper Snapple expects its adjusted earnings per share (or EPS) for full-year 2015 to be in the $3.85-to-$3.93 range. This reflects an upward revision from the company’s previous adjusted EPS guidance of $3.80 to $3.88, driven by strong performance in the first half of 2015.

The company is taking several initiatives to drive its sales growth. One of the company’s key priorities is increasing the distribution and availability of its products. The company is also focusing on innovation. Snapple Straight Up Tea and Hawaiian Punch pouches are some of the company’s recent innovations.

For more updates, visit our Nonalcoholic Beverages page.

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