By How Much Does Dr Pepper’s Value Rise If Its Margin Grows By More Than Expected?

DPS: Dr Pepper Snapple logo
DPS
Dr Pepper Snapple

Dr Pepper Snapple (NYSE:DPS) has had a solid 2016 so far, increasing guidance on full-year estimates twice — after the announcement of Q2 results, and after the announcement of Q3 results. Solid operational performance, leading to an increase in margin, despite a decline in the top line, pushed up estimates for the full-year earnings for Dr Pepper. The company now expects full-year core EPS to be in the $4.32-$4.40 range, up from the updated estimate of $4.27-$4.35 after the second quarter results.

North America forms >95% of the overall EBIT for Dr Pepper, and due to effective pricing and low commodity costs, Dr Pepper’s operating margin rose 80 basis points to 26.2% through September.

DPS Q&A 23-1

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Considering a scenario where Dr Pepper’s margin rises by more than expected currently, the company’s value will rise by almost 10%.

DPS Q&A 23

Have more questions on Dr Pepper Snapple? See the links below.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Dr Pepper Snapple

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