Soft Drink Stocks Reporting Q2 Earnings On July 27: KO, DPS

Investors of soft drink stocks have ample reason to be optimistic with leading food/beverage giant PepsiCo, Inc. (NYSE:PEP) once again reporting stellar Q2 results earlier this month thereby bringing the sector in the limelight. Pepsi also upped its full year earnings growth target based on a strong performance in the first half and a favorable outlook.

In fact, all the three soft drink behemoths - Pepsi, The Coca-Cola Company (NYSE:KO) and Dr Pepper Snapple Group, Inc. (NYSE:DPS) – have more or less performed well in the last three to four quarters. Higher sales of the so-called “healthy” non-carbonated drinks, an improved performance in the North America segments, pricing gains, lower costs of key raw materials, cost reductions along with productivity gains and overall better execution have aided these soft drink companies to deliver impressive results in the past few quarters.

Both Coca-Cola and Dr Pepper Snapple are set to report their quarterly results on July 27, before the opening bell. Will these soft drink makers be able to repeat Pepsi’s feat? Let’s have a look at what might be in store for them.

Coca-Cola

Last quarter, The Coca-Cola Company delivered a positive earnings surprise of 2.27%. In fact, the cola giant surpassed earnings estimates in each of the past four quarters with an average surprise of 2.99%.

The company has an Earnings ESP of 0.00% and a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for the quarter is pegged at 58 cents.

Coca-Cola is expected to continue to see improved volumes in North America and softness in some key emerging markets like Brazil and China in Q2. Pricing gains, cost cuts and productivity savings should continue to sustain the bottom line. However, unfavorable currency impact and lower volumes of carbonated soft drinks due to declining demand will continue to hurt the top line (read more: Can Coca-Cola Keep the Earnings Streak Alive in Q2).

Dr Pepper Snapple

Last quarter, Dr Pepper delivered a positive earnings surprise of 9.30%.The company surpassed estimates in each of the trailing four quarters with an average positive surprise of 4.48%.

The company has an Earnings ESP of 0.00% and a Zacks Rank #3. The Zacks Consensus Estimate for the quarter is pegged at $1.19 per share.

Softer fountain foodservice volumes, higher health and welfare along with other insurance costs, an arbitration charge related to a Mexican JV and increased marketing expenses are expected to drag profits in Q2. However, lower commodity costs will offer some bottom-line support (read more: What's in Store for Dr Pepper Snapple in Q2 Earnings?).

Don’t miss out on our full earnings release articles for these soft drink stocks, as the actual results might hold some surprises!