 | Dr Pepper numbers?by yeomps on May 8th, 2008 at 11:23 am |
With DPS not having much information in the way I financials I can’t bring myself to pull the trigger. So I decided to go on what little information that I have at my disposal. Sales: 5.7 billion; Now let us assume that DP trades at a similar Price to Sales ratio of some of the other soda companies:
PEP P/S = 2.67 –> equiv DPS price = 21.00
KO P/S = 4.40 –> equiv DPS price = 34.50
HANS P/S = 3.68 –> equiv DPS price = 29
JSDA P/S = 2.02 –> equiv DPS price = 16
Industry Avg P/S = 3.68 –> equiv DPS price = 29
So I guess the question is, which one is DPS more like? It’s gaining market share, it is the 3rd largest soda company, so I might pair it with HANS, which also happens to be the Industry average… That being said, I guess I could slap a $29 price target on this one. What do you guys think?
Note: Ameritrade is showing different values for P/S of DPS (says it is currently at 1.16) but I have no idea where they got that number from. That would imply a Sales per Share of about 21.80… I calculated a sales per share of 7.5 so take all of this with a grain of salt.
Snapple is being very innovative with new drinks.
I think there could be significant upside to the name.
May 8th, 2008 at 1:08 pmyeomps,
Statistically, spin-offs have done well as a group.
Not really answering your question in regards to a value, however, you’re on the right side of the trade I feel.
jog
May 8th, 2008 at 1:22 pmThis is true.
There are studies done, comparing parents to spinoffs; spinoffs outperform the parents by far.
May 8th, 2008 at 1:26 pmel-midge,
Indeed there are.
Gotham Capital’s Joel Greenblatt specialised in them.
jog
May 8th, 2008 at 1:41 pmI too think this has some upside, my question to myself is now, is my money better put to use elsewhere? I sold out of DRYS @ 94, got back in at 90, then stopped out this morning minutes after putting the order in at 92. With my track record on DRYS I’m tempted to just go full out margin trading the sucker (I’ve nailed that one so many times it’s unreal, starting to get nervous)
Who changed my logo? I was using Gunners on purpose. (hat tip: rage)
May 8th, 2008 at 1:50 pmin terms of valuation, it looks like a steal.
May 8th, 2008 at 1:54 pmgomez:
May 8th, 2008 at 2:14 pmwhat do you base the valuation on?