Dr Pepper gave us the news, and its stock got a bad case of earnings blues. Too bad ... the results shouldn't have caused more than perhaps a little investor indigestion.
Compared to expectations of $0.51 per share, Dr Pepper Snapple Group's
Don't get me wrong: The company's first full fiscal quarter since being spun off from British sweets maker Cadbury
Shares fell a nasty 13% on the news, and have continued to slide since then. However, I don't think last week's punishment of the stock quite fits the crime.
Where the pop is
Looking deeper into the numbers, there's actually quite a bit of encouraging news. Taking Glaceau out of the equation, volume was actually up a tad for almost all of the company's product lines -- up enough to help the company generate more than $100 million in earnings. While the number may come up short of a dubious estimate, that still translates into a net margin of about 7%
Now, I'm not naive enough to think that 7% is going to hold a candle to Hansen Natural's
The point is, after the recent drubbing based on what may well end up being an overly pessimistic earnings response, I think Dr Pepper could end up being a cool drink for parched portfolios.
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