Intrinsic value of Dr Pepper Snapple Group - DPS

Previous Close

$91.54

  Intrinsic Value

$130.83

stock screener

  Rating & Target

buy

+43%

  Value-price divergence*

+37%

Previous close

$91.54

 
Intrinsic value

$130.83

 
Up/down potential

+43%

 
Rating

buy

 
Value-price divergence*

+37%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of DPS stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 16.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.52
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.31
  5.28
  5.25
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
Revenue, $m
  6,440
  6,826
  7,229
  7,649
  8,087
  8,545
  9,023
  9,522
  10,043
  10,589
  11,159
  11,756
  12,381
  13,035
  13,719
  14,437
  15,188
  15,976
  16,801
  17,667
  18,574
  19,525
  20,523
  21,569
  22,667
  23,818
  25,026
  26,294
  27,624
  29,019
  30,484
Variable operating expenses, $m
 
  2,317
  2,436
  2,560
  2,689
  2,825
  2,966
  3,113
  3,267
  3,428
  3,597
  3,474
  3,659
  3,852
  4,054
  4,266
  4,489
  4,721
  4,965
  5,221
  5,489
  5,770
  6,065
  6,374
  6,699
  7,039
  7,396
  7,770
  8,163
  8,576
  9,009
Fixed operating expenses, $m
 
  2,981
  3,055
  3,132
  3,210
  3,290
  3,372
  3,457
  3,543
  3,632
  3,722
  3,816
  3,911
  4,009
  4,109
  4,212
  4,317
  4,425
  4,535
  4,649
  4,765
  4,884
  5,006
  5,131
  5,260
  5,391
  5,526
  5,664
  5,806
  5,951
  6,100
Total operating expenses, $m
  5,038
  5,298
  5,491
  5,692
  5,899
  6,115
  6,338
  6,570
  6,810
  7,060
  7,319
  7,290
  7,570
  7,861
  8,163
  8,478
  8,806
  9,146
  9,500
  9,870
  10,254
  10,654
  11,071
  11,505
  11,959
  12,430
  12,922
  13,434
  13,969
  14,527
  15,109
Operating income, $m
  1,402
  1,529
  1,738
  1,958
  2,188
  2,430
  2,684
  2,952
  3,233
  3,528
  3,839
  4,466
  4,811
  5,174
  5,556
  5,959
  6,383
  6,830
  7,301
  7,797
  8,320
  8,871
  9,451
  10,063
  10,708
  11,388
  12,104
  12,859
  13,654
  14,492
  15,375
EBITDA, $m
  1,626
  1,963
  2,180
  2,408
  2,647
  2,898
  3,161
  3,439
  3,730
  4,036
  4,359
  4,698
  5,055
  5,431
  5,826
  6,243
  6,682
  7,145
  7,632
  8,145
  8,686
  9,255
  9,856
  10,488
  11,155
  11,857
  12,597
  13,377
  14,199
  15,064
  15,976
Interest expense (income), $m
  117
  156
  156
  172
  188
  205
  223
  242
  261
  282
  303
  325
  349
  373
  399
  426
  454
  483
  514
  546
  580
  616
  653
  692
  733
  776
  821
  868
  918
  970
  1,024
Earnings before tax, $m
  1,283
  1,373
  1,582
  1,786
  2,000
  2,225
  2,461
  2,710
  2,971
  3,247
  3,536
  4,141
  4,462
  4,801
  5,157
  5,533
  5,929
  6,347
  6,787
  7,251
  7,740
  8,255
  8,799
  9,372
  9,976
  10,612
  11,283
  11,991
  12,737
  13,523
  14,351
Tax expense, $m
  434
  371
  427
  482
  540
  601
  665
  732
  802
  877
  955
  1,118
  1,205
  1,296
  1,392
  1,494
  1,601
  1,714
  1,832
  1,958
  2,090
  2,229
  2,376
  2,530
  2,693
  2,865
  3,047
  3,238
  3,439
  3,651
  3,875
Net income, $m
  847
  1,002
  1,155
  1,304
  1,460
  1,624
  1,797
  1,978
  2,169
  2,370
  2,582
  3,023
  3,257
  3,504
  3,765
  4,039
  4,328
  4,633
  4,954
  5,293
  5,650
  6,026
  6,423
  6,841
  7,282
  7,747
  8,237
  8,753
  9,298
  9,872
  10,476

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,787
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  9,791
  8,480
  8,980
  9,502
  10,046
  10,615
  11,208
  11,828
  12,476
  13,154
  13,862
  14,604
  15,380
  16,192
  17,043
  17,934
  18,868
  19,846
  20,871
  21,946
  23,073
  24,255
  25,494
  26,794
  28,157
  29,588
  31,088
  32,663
  34,315
  36,049
  37,868
Adjusted assets (=assets-cash), $m
  8,004
  8,480
  8,980
  9,502
  10,046
  10,615
  11,208
  11,828
  12,476
  13,154
  13,862
  14,604
  15,380
  16,192
  17,043
  17,934
  18,868
  19,846
  20,871
  21,946
  23,073
  24,255
  25,494
  26,794
  28,157
  29,588
  31,088
  32,663
  34,315
  36,049
  37,868
Revenue / Adjusted assets
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
Average production assets, $m
  3,807
  4,034
  4,272
  4,521
  4,780
  5,050
  5,332
  5,627
  5,936
  6,258
  6,595
  6,948
  7,317
  7,703
  8,108
  8,532
  8,976
  9,442
  9,930
  10,441
  10,977
  11,539
  12,129
  12,747
  13,396
  14,077
  14,790
  15,540
  16,326
  17,150
  18,016
Working capital, $m
  1,685
  -96
  -101
  -107
  -113
  -120
  -126
  -133
  -141
  -148
  -156
  -165
  -173
  -182
  -192
  -202
  -213
  -224
  -235
  -247
  -260
  -273
  -287
  -302
  -317
  -333
  -350
  -368
  -387
  -406
  -427
Total debt, $m
  4,478
  4,453
  4,903
  5,373
  5,863
  6,374
  6,908
  7,466
  8,049
  8,659
  9,297
  9,964
  10,663
  11,394
  12,160
  12,962
  13,802
  14,682
  15,605
  16,573
  17,587
  18,650
  19,766
  20,936
  22,163
  23,450
  24,801
  26,218
  27,705
  29,265
  30,902
Total liabilities, $m
  7,657
  7,632
  8,082
  8,552
  9,042
  9,553
  10,087
  10,645
  11,228
  11,838
  12,476
  13,143
  13,842
  14,573
  15,339
  16,141
  16,981
  17,861
  18,784
  19,752
  20,766
  21,829
  22,945
  24,115
  25,342
  26,629
  27,980
  29,397
  30,884
  32,444
  34,081
Total equity, $m
  2,134
  848
  898
  950
  1,005
  1,061
  1,121
  1,183
  1,248
  1,315
  1,386
  1,460
  1,538
  1,619
  1,704
  1,793
  1,887
  1,985
  2,087
  2,195
  2,307
  2,425
  2,549
  2,679
  2,816
  2,959
  3,109
  3,266
  3,432
  3,605
  3,787
Total liabilities and equity, $m
  9,791
  8,480
  8,980
  9,502
  10,047
  10,614
  11,208
  11,828
  12,476
  13,153
  13,862
  14,603
  15,380
  16,192
  17,043
  17,934
  18,868
  19,846
  20,871
  21,947
  23,073
  24,254
  25,494
  26,794
  28,158
  29,588
  31,089
  32,663
  34,316
  36,049
  37,868
Debt-to-equity ratio
  2.098
  5.250
  5.460
  5.650
  5.840
  6.010
  6.160
  6.310
  6.450
  6.580
  6.710
  6.820
  6.930
  7.040
  7.130
  7.230
  7.320
  7.400
  7.480
  7.550
  7.620
  7.690
  7.750
  7.810
  7.870
  7.930
  7.980
  8.030
  8.070
  8.120
  8.160
Adjusted equity ratio
  0.043
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  847
  1,002
  1,155
  1,304
  1,460
  1,624
  1,797
  1,978
  2,169
  2,370
  2,582
  3,023
  3,257
  3,504
  3,765
  4,039
  4,328
  4,633
  4,954
  5,293
  5,650
  6,026
  6,423
  6,841
  7,282
  7,747
  8,237
  8,753
  9,298
  9,872
  10,476
Depreciation, amort., depletion, $m
  224
  434
  442
  450
  459
  468
  477
  487
  497
  508
  519
  232
  244
  257
  270
  284
  299
  315
  331
  348
  366
  385
  404
  425
  447
  469
  493
  518
  544
  572
  601
Funds from operations, $m
  841
  1,436
  1,597
  1,754
  1,919
  2,092
  2,274
  2,465
  2,666
  2,878
  3,101
  3,254
  3,501
  3,761
  4,035
  4,324
  4,628
  4,948
  5,285
  5,641
  6,016
  6,411
  6,827
  7,266
  7,729
  8,216
  8,730
  9,271
  9,842
  10,443
  11,077
Change in working capital, $m
  -98
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
Cash from operations, $m
  939
  1,441
  1,602
  1,760
  1,925
  2,098
  2,281
  2,472
  2,674
  2,886
  3,109
  3,263
  3,510
  3,770
  4,045
  4,334
  4,638
  4,959
  5,297
  5,653
  6,029
  6,424
  6,841
  7,281
  7,744
  8,232
  8,747
  9,289
  9,861
  10,463
  11,097
Maintenance CAPEX, $m
  0
  -127
  -134
  -142
  -151
  -159
  -168
  -178
  -188
  -198
  -209
  -220
  -232
  -244
  -257
  -270
  -284
  -299
  -315
  -331
  -348
  -366
  -385
  -404
  -425
  -447
  -469
  -493
  -518
  -544
  -572
New CAPEX, $m
  -182
  -228
  -238
  -248
  -259
  -270
  -282
  -295
  -308
  -322
  -337
  -353
  -369
  -387
  -405
  -424
  -444
  -465
  -488
  -511
  -536
  -562
  -590
  -618
  -649
  -680
  -714
  -749
  -786
  -825
  -866
Cash from investing activities, $m
  -189
  -355
  -372
  -390
  -410
  -429
  -450
  -473
  -496
  -520
  -546
  -573
  -601
  -631
  -662
  -694
  -728
  -764
  -803
  -842
  -884
  -928
  -975
  -1,022
  -1,074
  -1,127
  -1,183
  -1,242
  -1,304
  -1,369
  -1,438
Free cash flow, $m
  750
  1,086
  1,230
  1,369
  1,515
  1,669
  1,830
  1,999
  2,178
  2,365
  2,563
  2,690
  2,909
  3,140
  3,383
  3,639
  3,910
  4,194
  4,494
  4,811
  5,144
  5,496
  5,867
  6,258
  6,671
  7,105
  7,564
  8,047
  8,557
  9,094
  9,660
Issuance/(repayment) of debt, $m
  1,050
  -15
  450
  470
  490
  511
  534
  558
  583
  610
  638
  667
  698
  731
  766
  802
  840
  881
  923
  967
  1,014
  1,064
  1,115
  1,170
  1,227
  1,287
  1,351
  1,417
  1,487
  1,560
  1,637
Issuance/(repurchase) of shares, $m
  -505
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  516
  -15
  450
  470
  490
  511
  534
  558
  583
  610
  638
  667
  698
  731
  766
  802
  840
  881
  923
  967
  1,014
  1,064
  1,115
  1,170
  1,227
  1,287
  1,351
  1,417
  1,487
  1,560
  1,637
Total cash flow (excl. dividends), $m
  1,262
  1,071
  1,680
  1,839
  2,005
  2,180
  2,364
  2,557
  2,761
  2,975
  3,201
  3,357
  3,608
  3,871
  4,149
  4,441
  4,750
  5,075
  5,417
  5,778
  6,159
  6,560
  6,982
  7,428
  7,898
  8,393
  8,914
  9,464
  10,044
  10,654
  11,298
Retained Cash Flow (-), $m
  49
  -491
  -50
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -81
  -85
  -89
  -93
  -98
  -103
  -107
  -113
  -118
  -124
  -130
  -136
  -143
  -150
  -157
  -165
  -173
  -182
Prev. year cash balance distribution, $m
 
  1,777
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,357
  1,630
  1,787
  1,951
  2,123
  2,305
  2,495
  2,696
  2,907
  3,130
  3,283
  3,530
  3,790
  4,064
  4,352
  4,656
  4,977
  5,315
  5,671
  6,046
  6,442
  6,859
  7,298
  7,761
  8,250
  8,764
  9,307
  9,878
  10,481
  11,116
Discount rate, %
 
  6.00
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
PV of cash for distribution, $m
 
  2,224
  1,443
  1,474
  1,491
  1,493
  1,480
  1,452
  1,410
  1,354
  1,285
  1,177
  1,093
  1,002
  906
  808
  710
  614
  523
  437
  359
  290
  229
  177
  134
  99
  71
  50
  34
  23
  15
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Dr Pepper Snapple Group, Inc. is an integrated brand owner, manufacturer and distributor of non-alcoholic beverages in the United States, Mexico and Canada. The Company offers a diverse portfolio of flavored (non-cola) carbonated soft drinks (CSDs) and non-carbonated beverages (NCBs), including ready-to-drink teas, juices, juice drinks, water and mixers. The Company's segments include Beverage Concentrates, Packaged Beverages and Latin America Beverages. The Company's brand portfolio includes CSD brands, such as Dr Pepper, Canada Dry, Penafiel, Squirt, 7UP, Crush, A&W, Sunkist soda and Schweppes, and NCB brands, such as Snapple, Hawaiian Punch, Mott's and Clamato. The Company's NCB brands include Snapple, Hawaiian Punch, Mott's, FIJI mineral water, Clamato, Yoo-Hoo, Deja Blue, Bai Brands, ReaLemon, AriZona tea, Vita Coco coconut water, Mr and Mrs T mixers, BodyArmor, Nantucket Nectars, Garden Cocktail, Mistic and Rose's.

FINANCIAL RATIOS  of  Dr Pepper Snapple Group (DPS)

Valuation Ratios
P/E Ratio 19.8
Price to Sales 2.6
Price to Book 7.9
Price to Tangible Book
Price to Cash Flow 17.9
Price to Free Cash Flow 22.1
Growth Rates
Sales Growth Rate 2.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 1.1%
Cap. Spend. - 3 Yr. Gr. Rate -0.2%
Financial Strength
Quick Ratio 179
Current Ratio 0.1
LT Debt to Equity 209.4%
Total Debt to Equity 209.8%
Interest Coverage 12
Management Effectiveness
Return On Assets 9.9%
Ret/ On Assets - 3 Yr. Avg. 9.6%
Return On Total Capital 13.9%
Ret/ On T. Cap. - 3 Yr. Avg. 14.3%
Return On Equity 39.2%
Return On Equity - 3 Yr. Avg. 34.7%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 59.9%
Gross Margin - 3 Yr. Avg. 59.5%
EBITDA Margin 25.2%
EBITDA Margin - 3 Yr. Avg. 24%
Operating Margin 21.8%
Oper. Margin - 3 Yr. Avg. 20.6%
Pre-Tax Margin 19.9%
Pre-Tax Margin - 3 Yr. Avg. 18.8%
Net Profit Margin 13.2%
Net Profit Margin - 3 Yr. Avg. 12.3%
Effective Tax Rate 33.8%
Eff/ Tax Rate - 3 Yr. Avg. 34.6%
Payout Ratio 45.6%

DPS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DPS stock intrinsic value calculation we used $6440 million for the last fiscal year's total revenue generated by Dr Pepper Snapple Group. The default revenue input number comes from 2016 income statement of Dr Pepper Snapple Group. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our DPS stock valuation model: a) initial revenue growth rate of 6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6%, whose default value for DPS is calculated based on our internal credit rating of Dr Pepper Snapple Group, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Dr Pepper Snapple Group.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of DPS stock the variable cost ratio is equal to 34.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2908 million in the base year in the intrinsic value calculation for DPS stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Dr Pepper Snapple Group.

Corporate tax rate of 27% is the nominal tax rate for Dr Pepper Snapple Group. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the DPS stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for DPS are equal to 59.1%.

Life of production assets of 30.3 years is the average useful life of capital assets used in Dr Pepper Snapple Group operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for DPS is equal to -1.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $2134 million for Dr Pepper Snapple Group - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 182.533 million for Dr Pepper Snapple Group is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Dr Pepper Snapple Group at the current share price and the inputted number of shares is $16.7 billion.

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COMPANY NEWS

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▶ Can Coca-Cola Expect Some Fizz in 2H17?   [08:07AM  Market Realist]
▶ 3 Reasons Dr Pepper Snapple Group Stock Could Rise   [Aug-30-17 12:00PM  Motley Fool]
▶ Why Coca-Cola Shareholders Have Something to Worry About   [Aug-18-17 06:02AM  Motley Fool]
▶ Dr Pepper Snapple's Stock Is Stuck   [Aug-10-17 04:57PM  Motley Fool]
▶ Why Dr Pepper Snapples Margins Contracted in 2Q17   [Jul-31-17 09:08AM  Market Realist]
▶ What Drove Dr Pepper Snapples 2Q17 Sales?   [11:06AM  Market Realist]
▶ Dr Pepper Snapple Group posts 2Q profit   [01:34AM  Associated Press]
▶ Dr Pepper Snapple Group posts 2Q profit   [08:14AM  Associated Press]
▶ S&P 500 stocks to find value   [12:43PM  CNBC Videos]
▶ Will Dr Pepper Snapples 2Q17 Earnings Surpass Expectations?   [Jul-24-17 02:36PM  Market Realist]
▶ Why sparkling water sales could spike by 20% in 2017   [Jul-23-17 08:29AM  Yahoo Finance]
▶ Will Coca-Colas 2Q17 Results Boost Its Stock Price?   [Jul-21-17 12:30PM  Market Realist]
▶ Soda is the new cigarette: Cowen's Vivien Azer   [Jul-11-17 03:48PM  CNBC Videos]
▶ Where Does PepsiCos Valuation Stand ahead of 2Q Results?   [Jul-07-17 10:36AM  Market Realist]
▶ The Latest Celebrity Trend: Weird Food   [Jul-01-17 10:00AM  Fortune]
▶ Dr Pepper Snapple names CEO of healthy drink brand   [12:45PM  American City Business Journals]
▶ Why BMO Capital Markets Is Downgrading Beverage Stocks   [Jun-10-17 08:45AM  24/7 Wall St.]
▶ Today's call of the day: Soda   [02:02PM  CNBC Videos]
▶ PepsiCo Eyes Acquiring Vita Coco   [12:28PM  GuruFocus.com]
▶ When Viral Marketing Backfires   [Jun-01-17 04:41PM  The Wall Street Journal]
▶ Consumer Companies Analyst Ratings for May 1519, 2017   [May-22-17 05:06PM  Market Realist]
▶ Dr Pepper Snapple Group Declares Quarterly Dividend   [May-17-17 06:09PM  PR Newswire]
▶ Lets Play: High School Makeover Challenge   [May-15-17 01:38PM  GlobeNewswire]
Financial statements of DPS
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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