1 / 20

Dr. Pepper Snapple Group (DPS)

Dr. Pepper Snapple Group (DPS). Covering Analyst: Joshua Jordan jjordan3@uoregon.edu. DPS History. Dr. Pepper brand since 1885 Series of Acquisitions Most recent: DPSU, DPSUBG Incorporated October 24, 2007. Business Overview. Brand Owner Manufacturer Distributor. United States (89%)

darrell
Download Presentation

Dr. Pepper Snapple Group (DPS)

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Dr. Pepper Snapple Group (DPS) Covering Analyst: Joshua Jordan jjordan3@uoregon.edu

  2. DPS History • Dr. Pepper brand since 1885 • Series of Acquisitions • Most recent: DPSU, DPSUBG • Incorporated October 24, 2007

  3. Business Overview • Brand Owner • Manufacturer • Distributor • United States (89%) • Canada (4%) • Latin America (7%) Dr. Pepper, 7-Up, A&W, Sunkist, Canada Dry, Snapple, Hawaiian Punch, Mott’s

  4. Dr. Pepper Snapple’s Strategy • Expand distribution channels • Build and enhance existing brands • Take advantage of high-margin channels • Become more efficient through RCI

  5. LRB Industry • Highly Competitive • Centralized • 15.2 Billion Cases

  6. CSD Industry • Dominated by Coca-Cola, PepsiCo, and Dr. Pepper Snapple • 9.3 Billion Cases

  7. Risks and Drawbacks • Consumer Health Preferences • Commodity Prices • Health Regulations • Competition • Retail Contracts

  8. Positives • Research and development is creating healthier beverages • Penetrating distribution channels • More efficient operations through RCI

  9. Revenue • Beverage Concentrates • Highest Margins • Packaged Beverages • Lowest Margins • Latin America Beverages

  10. Customers • Retailers • Wal-Mart (10% of total sales) • The Kroger Co. • Safeway • Food Service • Mcdonald’s • Yum! • Burger King • Sonic • Wendy’s • Convenience Stores • 7-Eleven

  11. DCF Expectations • Increasing COGS as a percent of revenue • SG&A decreasing slightly as a percent of revenue • Tax rate increasing to 37% • Gradual rates as opposed to straight-line rates • Increasing capital expenditures

  12. DCF Valuation • Possible reasons for price differential • Beta • Cost of Debt

  13. Comparables Screening • Industry • Licensing • Size • Beta • Growth • Margins

  14. Comparables • Coca-Cola (KO) – 30% • Coke, Fanta, Sprite, Barq’s • PepsiCo (PEP) – 30% • Pepsi, Mountain Dew, Sierra Mist, Mug • Monster (MNST) – 20% • Monster, Hansen’s • Cott (Cot) – 10% • Cott, RC Cola • National Beverage (FIZZ) – 10% • Shasta

  15. Forward Comparables Valuation

  16. Final Valuation

  17. Profit Returns • Dividends • Stock Repurchases

  18. Comparable Profit Returns

  19. Recommendation: Hold for Tall Firs and Svigals • Outperforming strong competitors in market share • Increasing profit returns to shareholders through dividends • Innovative product line and cost-cutting techniques • Note: Future update is important to valuate success of ten-calorie soda lines

  20. Questions

More Related