Dividend investors were severely disappointed earlier this week when Coca-Cola (NYSE:KO) released a quarterly report that missed analyst expectations and warned that 2015 would be a "transition year" — two dreaded words for shareholders of any company.

Shares of the company traded down over 9% following the release, as investors began to question how safe this once rock solid dividend stock still is.

That might lead you to believe that any company focusing on carbonated soft drinks is bound to live out the same fate as Coke. But following the release of Dr Pepper Snapple Group's (NYSE:KDP) quarterly reports, that doesn't seem to be the case

If you're unfamiliar with all of the different drinks under the Dr. Pepper Snapple umbrella, check out the picture below. And keep reading to find out why investors were bidding shares of the company up by as much as 5% following the company's release.

Source: Dr. Pepper Snapple

First, let's look at the headline numbers
When any company reports earnings, eyes immediately go to the earnings and revenue numbers. We Fools like to take a longer view than just one quarter — but we also realize that with the right context, these figures can be important.

Below is what Wall Street was expecting from Dr. Pepper Snapple, and what it actually got.


Q3 Expected

Q3 Actual





$1.5 Billion

$1.6 Billion

Source: SEC filings

It's not hard to see why investors were happy with the results. In addition to beating estimates, the company raised guidance. Where once management saw sales being flat and core earnings per share of $3.47, the group now sees sales rising 1% with earnings per share of $3.59. On the earnings front, that's a significant bump.

How the company is juicing its returns
With soda more and more in the crosshairs of health-conscious parents and legislatures, life hasn't been easy for the nation's largest soft-drink-makers. But since January of 2010, Dr. Pepper has returned 168% for shareholders, while Coke has returned just 65% -- below the overall return for the S&P 500. So how has Dr. Pepper been able to defy logic?

Surprisingly, it's not because it's core products are selling any better than Coke's. As you can see, Coke has done a better job at keeping volumes up globally.

It's worth noting, too, that sales of carbonated soft drinks (soda) for each company are generally down, while sales of non-carbonated drinks are the main growth drivers.

So how has Dr. Pepper been able to grow its stock if volumes are down? The company's solution is called Rapid Continuous Improvement (RCI). Within every Dr. Pepper production and distribution facility, there is a dedicated employee whose focus is on improving safety, quality, delivery, productivity, and growth.

As you might expect, focusing on these areas — and giving it more than just lip service — can help make systems far more efficient. That's why Dr. Pepper has been able to expand it's gross margin at a faster clip than Coke.

How important is RCI to the company's growth? Dr. Pepper CEO Larry Young says that, "[RCI] has become the foundation of our business, and it continues to yield improvements across the organization."

It should be no surprise, then, that Coke announced a string of cost-cutting measures with the release of its quarterly report this week. The company now sees that — at least in the arena of efficiency — it is no longer the industry leader, and has to play catch up.

Brian Stoffel has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola. The Motley Fool has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.