Dr Pepper’s (NYSE: DPS) Stock Rises Defying Market Conditions

Stock, Trading, Pepsi, Coke, Dr PepperThe stock market is very sensitive and whenever the bulls are active there is brisk activity as share prices start soaring, leading to the general index showing signs of going up. In contrast, when the bears are active the stock prices nosedive and there is a general dip in the index.

However, this is a general rule and stock markets do not always follow the general rules. Sometimes, when the markets are down, a few stocks remain active and show an upward trend in prices.

Unusual rally in Dr Pepper

Recently, while the markets were listless, Dr Pepper Snapple Group’s (NYSE: DPS) stock rallied, rising in heavy volumes. This could be attributed to a dividend yield of 3.2 percent and the annual return equity was quite high, as was the profit margin over a period of several years.  Its portfolio included leading brands such as Sunkist soda, Canada Dry, Squirt, Schweppes and 7UP.

The recent deal with Buffalo Wild Wings (NASDAQ: BWLD) has made all the Dr Pepper products available at all the BWLD outlets. This boosted its sales and the stock prices peaked to an all-time high at $51.71. Big time investors and buyers have favored this particular stock lately.

Third quarter earnings not very encouraging

Right from the third quarter, earnings growth showed marked improvement and rose 18 percent to 97 cents per share. This was higher than the estimate of Thomson/Reuters that pegged it at 85 cents a share. However, the sales front wasn’t very encouraging; with a dip in the revenue by 1 percent from a year back at $1.46 billion. Bottler case sales too showed a downward trend at 2 percent in same quarter, with both non-carbonated and carbonated soft drinks reporting a decline of 2 percent in sales.

The picture is not all rosy for Dr Pepper Snapple Group or its competitors Pepsi (NYSE: PEP) and Coke (NASDAQ:COKE). Recent reports from Beverage Digest say that there is a marked dip in the per capita consumption of soda in the US right from 1998, which is a major contributing factor.

Not to be undone, Dr Pepper has introduced a new line of 10-calorie sodas hoping to revive soda sales. With fourth quarter results falling, the company made a smart move by raising its quarterly dividend from 38 cents to 41 cents a share. This dividend is scheduled to be paid to the shareholders this April.

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