StockCall Insight into Coca Cola and Dr Pepper Snapple: Emerging Markets to the Rescue

Tue Feb 12, 2013 7:31am EST

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LONDON,  February 12, 2013  /PRNewswire/ --

The consumption of soft drinks such as The Coca Cola Co. (NYSE: KO)and Dr Pepper
Snapple Group Inc. (NYSE: DPS) in the developed markets has been on a decline
consistently over the past six or seven years due to consumers switching to
healthier substitutes like juices and energy drinks. The key revenue streams
such as  Europe  and  North America  have exhibited heavy declines in sales. The
sales volume of carbonated drinks dipped nearly 2% in the  USA  during last
year. StockCall has issued technical analysis and charting reports on on Coca
Cola and Dr Pepper Snapple. Download these free reports now at

A quick recap on Coca Cola for 2012

To negate the industry slowdown many soft drinks companies are trying to push up
the prices in order to safeguard profit margins. In addition, giants like Coca
Cola are striving hard to promote sales of other product lines like Powerade and
Minute Maid. In 2012, Coca Cola's top-line grew by 3% to 4 %, primarily due to
the robust performance of flagship products in the emerging markets. Sales
volume grew by 15% in  India; meanwhile  Russia  and  South Africa  reported a
7% growth. Download the free research on The Coca Cola Co. today by registering

Coca Cola Pre-earnings

During 2012, the gross margin of Coca Cola was at 60.5% effectively, compared to
61.1% in 2011. Nevertheless, commodity prices have been constantly easing over
the last six months thus the cost estimate of many companies is likely to
reduce. Coca Cola corrected its incremental cost forecast to  $225 million  from
 $300 million  in the third quarter of 2012.

Coca Cola reported a collective revenue and gross profit of  $49 billion  and 
$30 billion  respectively in 2012. The current stock price is trading at  $38.77
 close to its 52-week low. The stock price seems undervalued as the demand from
the emerging markets will keep the revenue forecast in-line. In addition the
easing commodity prices will keep the gross profit margins healthy going
forward. There may be an upside of 5% on the Coca Cola stock.

The company reports its fiscal fourth quarter earnings today (these data were
not available at the time this article was completed).

Dr Pepper Pre-earnings

Dr Pepper Primarily operates in  North America  with more than 90% of its
revenue generated from US and  Canada. The company reported a collective revenue
and EBITDA of  $6 billion  and  $1.3 billion  respectively in 2012. The current
stock price is trading at  $ 45.73  close to the 52-week high of  $46.37. The
market price seems fair as the 2012 reported revenue was in-line with the
original forecast and a potential upside of another 0.5% to 1% may be achieved
on the current stock price. Sign up and have access to our free report on Dr
Pepper Snapple Group Inc. at   

The company reports its fourth quarter 2012 earnings tomorrow,  February 13th,

Opportunity in Adversity

The increasing awareness of health related problems with excessive consumption
of carbonated drinks underpins the declining demand for soft drinks. The overall
industry sales have been on a decline from the past five or six years, and the
trend may continue. However, diversifying into other non-carbonated product
categories presents a huge opportunity for the soft drinks market. The demand
for non-carbonated drinks have been increasing constantly in  Europe  and  North
America  and increased awareness in the Asian region will drive the market going
forward. The likes of Coca cola and other key players have already diversified
into other product categories that will allow revenue streams to be stable going

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