CCEP

Keurig Dr Pepper Is Moving in the Right Direction

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Image Source: Keurig Dr Pepper – September 2019 IR Presentation By Callum Turcan Keurig Dr Pepper Inc (KDP) markets, sells, and distributes numerous coffees, flavored soft drinks, teas, waters, juices, mixers, energy drinks, and other types of beverages through either its ownership of the brand or through its various partnerships. The beverage giant’s top brands include 7UP, Dr Pepper, Green Mountain Coffee Roasters, Keurig, Snapple, and Mott’s. JAB Holding Company, a privately-held entity, owns ~87% of Keurig Dr Pepper after Dr Pepper Snapple merged with Keurig Green Mountain last year. We expect Keurig Dr Pepper to generate sizable free cash flows as a combined entity going forward, but we also caution that the company’s hefty net debt load weighs negatively … Read more

Our Reports on Stocks in the Nonalcoholic Beverages Industry

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Image Source: Mike Mozart Structure of the Nonalcoholic Beverages Industry The nonalcoholic beverage segment of the commercial beverage industry is highly competitive, consisting of numerous companies that make various sparkling beverages, water products, juices, fruit drinks, energy and other performance-enhancing drinks. Pricing, advertising, product innovation, the availability of in-store private-label beverages, and health concerns about sugar-sweetened beverages are key drivers that impact demand. Leading brands with high levels of consumer acceptance and an expansive distribution network are sources of competitive strengths. We like the structure of the group. We’ve reallocated our resources to cover more recession-resistant stocks. See here.

Coca-Cola Posts a Nice Quarter But Shares Too Pricey

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By Callum Turcan The Coca-Cola Company (KO) reported third-quarter earnings for fiscal 2019 (period ended September 27) on October 18, which were positively received by the market as the beverage giant showed signs that there’s strong demand worldwide for its offerings. Coca-Cola’s GAAP net revenues jumped 8% year-over-year while its non-GAAP organic revenues increased 5%, supported by higher prices and a favorable product mix that offset the negative impact from reduced concentrate sales. Management noted that Coca-Cola continued to “gain value share” in the ready-to-drink non-alcoholic beverage market. Shares of KO yield 2.9% as of this writing and ended up over 2% during normal trading hours on Friday October 18. Coca-Cola As an aside, it’s important to remember that Coca-Cola … Read more

PepsiCo Posts Solid Quarterly Report, Targets Powerful Long-Term Growth Trends

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Image Source: PepsiCo Inc – IR Presentation By Callum Turcan On October 3, PepsiCo (PEP) reported third quarter earnings for fiscal 2019 (12 week period ended September 7) that were positively received by the market as the beverage and snack company beat both consensus top and bottom line estimates. Management reiterated that PepsiCo sees its organic non-GAAP revenues growing by at least 4% annually this fiscal year and that free cash flows would come in at approximately $5.0 billion, enough to cover approximately $5.0 billion in expected dividend payments. While core constant currency (non-GAAP) EPS is still expected to decline by 1% annually this fiscal year, strong apparent underlying demand for PepsiCo’s products creates room for optimism. Shares of PEP … Read more

Owens-Illinois’ Debt Load Is Daunting, We Are Staying Away From This Value Trap

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Image Source: Owens-Illinois Inc – IR Presentation By Callum Turcan Owens-Illinois Inc (OI) is a global manufacturer of glass packaging products, and we see the firm as a major beneficiary of the shift in consumer preferences towards non-plastic packaging options for health and environmental reasons. As of this writing, shares of OI yield 1.9% on a forward-looking basis after management initiated a new dividend policy that saw common quarterly payouts commence in 2019. While Owens-Illinois’ share price below $11/share, as it is at the time of this writing, appears cheap at first glance because shares are trading at a steep discount to our $17 per share fair value estimate, we caution that its technicals are telling another story. Investors were … Read more

Coca-Cola’s Valuation Is Stretched

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Image Source: Broderick By Callum Turcan Coca-Cola Company (KO) posted a great second quarter report for 2019 on July 23, sending shares up 6% on the day. Management surprised the market by upgrading their forecast for Coca-Cola’s full-year performance with guidance for organic revenue, constant currency operating income, net operating cash flow, and capital expenditures for 2019 all getting a boost. We still think shares of KO are overvalued as the market has gotten ahead of itself. Consumer staples companies trading at premium valuations late in the business cycle are prime examples of how irrational exuberance can seep into every corner of the market. Furthermore, the IMF just downgraded global GDP growth projections for both 2019 and 2020, and while … Read more

Reviewing PepsiCo’s Latest Earnings

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Image Source: PepsiCo Inc – IR Presentation By Callum Turcan Maker of snacks and sugary beverages, PepsiCo Inc (PEP) posted second-quarter earnings for fiscal 2019 on July 9 that were positively received by the market. PepsiCo reaffirmed 2019 guidance calling for 4% annual organic revenue growth, a 1% decline in core constant EPS (3% decline when including an expected 200 basis point headwind from foreign currency movements) versus 2018 levels, and ~$4.5 billion in free cash flow generation. Shares of PEP yield 2.9% as of this writing and we like PepsiCo’s dividend coverage. However, please note that the company expects to spend $5.0 billion on dividends and $3.0 billion on share buybacks this year. Forecasted free cash flows will only … Read more

PepsiCo Fights off Forex Headwinds as it Gets Ready to Take on Amazon

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Image Source: PepsiCo Inc – IR Presentation By Callum Turcan While foreign currency headwinds are proving quite troublesome, PepsiCo continues to post strong organic growth that helped drive its outperformance during the first quarter of 2019. That strong performance will be needed as Amazon gets ready to enter the energy beverage arena. PepsiCo Inc’s (PEP) shares shot up to record highs on April 17 after posting first quarter results that clearly impressed the market. With shares now trading around $127 as of this writing, the beverage and snack giant yields 2.9% with decent dividend coverage going forward. The company beat consensus top and bottom-line estimates while reaffirming 2019E guidance, which signals to the market that management is confident in PepsiCo’s … Read more

Cola Giants Fourth Quarter Earnings and Valuation Distributions

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Image Source: Sean Loyless Coca-Cola and PepsiCo expect mid-single-digit organic revenue growth to continue in 2019, but currency headwinds are impacting reported figures. We’re less than enthused about the near-term free cash flow expectations of both companies, and tepid macroeconomic growth expectations and potentially elevated costs, such as freight, are weighing on near-term outlooks. By Kris Rosemann Coca-Cola’s Cautious 2019 Guidance Disappoints Image Shown: shares of Coca-Cola are trading in the ~$46 range as of this writing, which is just below the upper bound of our fair value range for shares. Shares of Coca-Cola (KO) tumbled following its fourth quarter 2018 earnings report, results released February 14, as it issued cautious guidance for 2019 due to, in the words of … Read more

Valuentum Stock Screeners

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This article was sent to members via email December 29. That email can be accessed at the link that follows this article. By Brian Nelson, CFA Hi everyone, I wanted to provide an update with respect to Valuentum’s stock screeners. We believe our stock screeners are among the most robust when it comes to providing forward-looking data, or data that is important with respect to the investment decision-making process. We publish screens in each of the monthly newsletters, but we also provide a basic weekly screener for download on the left column of the website, “Download Weekly Stock Screener (xls) — login required.”   We also have other products. The more robust DataScreener, for example, is part of the quarterly Financial … Read more