Head-To-Head Analysis: Dr Pepper Snapple Group (DPS) & AmBev (ABEV)

Dr Pepper Snapple Group (NYSE: DPS) and AmBev (NYSE:ABEV) are both large-cap consumer staples companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, risk, profitability and dividends.

Volatility and Risk

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Dr Pepper Snapple Group has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500. Comparatively, AmBev has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Dr Pepper Snapple Group and AmBev, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dr Pepper Snapple Group 0 10 5 0 2.33
AmBev 0 1 4 0 2.80

Dr Pepper Snapple Group presently has a consensus price target of $117.43, indicating a potential downside of 2.98%. AmBev has a consensus price target of $7.83, indicating a potential upside of 16.92%. Given AmBev’s stronger consensus rating and higher probable upside, analysts plainly believe AmBev is more favorable than Dr Pepper Snapple Group.

Valuation and Earnings

This table compares Dr Pepper Snapple Group and AmBev’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dr Pepper Snapple Group $6.69 billion 3.25 $1.08 billion $4.54 26.66
AmBev $15.01 billion 7.01 $2.30 billion $0.23 29.13

AmBev has higher revenue and earnings than Dr Pepper Snapple Group. Dr Pepper Snapple Group is trading at a lower price-to-earnings ratio than AmBev, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Dr Pepper Snapple Group and AmBev’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dr Pepper Snapple Group 16.08% 37.05% 8.19%
AmBev 15.68% 24.16% 14.10%

Dividends

Dr Pepper Snapple Group pays an annual dividend of $2.32 per share and has a dividend yield of 1.9%. AmBev pays an annual dividend of $0.15 per share and has a dividend yield of 2.2%. Dr Pepper Snapple Group pays out 51.1% of its earnings in the form of a dividend. AmBev pays out 65.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Dr Pepper Snapple Group has raised its dividend for 8 consecutive years.

Insider and Institutional Ownership

92.7% of Dr Pepper Snapple Group shares are held by institutional investors. Comparatively, 7.2% of AmBev shares are held by institutional investors. 0.6% of Dr Pepper Snapple Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Dr Pepper Snapple Group beats AmBev on 9 of the 17 factors compared between the two stocks.

Dr Pepper Snapple Group Company Profile

Dr Pepper Snapple Group, Inc. manufactures and distributes non-alcoholic beverages in the United States, Mexico and the Caribbean, and Canada. The company operates through three segments: Beverage Concentrates, Packaged Beverages, and Latin America Beverages. It offers flavored carbonated soft drinks (CSDs) and non-carbonated beverages (NCBs), including ready-to-drink teas, juices, juice drinks, mineral and coconut water, and mixers, as well as manufactures and sells Mott's apple sauces. The company sells its flavored CSD products primarily under the Dr Pepper, Canada Dry, Peñafiel, Squirt, 7UP, Crush, A&W, Sunkist soda, Schweppes, RC Cola, Big Red, Vernors, Venom, IBC, Diet Rite, and Sun Drop; and NCB products primarily under the Snapple, Hawaiian Punch, Mott's, FIJI, Clamato, Bai, Yoo-Hoo, Deja Blue, ReaLemon, AriZona tea, Vita Coco, BODYARMOR, Mr & Mrs T mixers, Nantucket Nectars, Garden Cocktail, Mistic, and Rose's brand names. It serves bottlers and distributors, and retailers. Dr Pepper Snapple Group, Inc. was incorporated in 2007 and is headquartered in Plano, Texas.

AmBev Company Profile

Ambev S.A., through its subsidiaries, produces, distributes, and sells beer, draft beer, carbonated soft drinks (CSD), other non-alcoholic beverages, malt, and food in the Americas. It operates through Latin America North, Latin America South, and Canada segments. The company offers beer primarily under the Skol, Brahma, Antarctic, Brahva, Brahva Gold, Extra, Budweiser, Bud Light, Stella Artois, Corona, Modelo Especial, Beck, Leffe, Hoegaarden, Presidente, Brahma Light, President Light, Bohemia, The One, Quilmes Clásica, Paceña, Taquiña, Huari, Becker, Báltica, Ouro Fino, Pilsen, Patricia, Labatt Blue, Alexander Keith's, Kokanee, Banks, and Deputy brands. It also provides CSD, bottled water, isotonic beverages, energy drinks, coconut water, powdered and natural juices, and ready-to-drink teas under the Guaraná Antarctica, Gatorade, H2OH!, Lipton Iced Tea, Fusion, Do Bem, Pepsi, Canada Dry, Squirt, Red Rock, Pepsi-Cola, Seven Up, and Frutee brands, as well as cereal bars. Ambev S.A. offers its products through a network of third-party distributors and a direct distribution system. The company was founded in 1885 and is headquartered in São Paulo, Brazil. Ambev S.A. is a subsidiary of Interbrew International B.V.

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