Constellation Brands (NYSE: STZ) and Dr Pepper Snapple Group (NYSE:DPS) are both large-cap consumer staples companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, earnings, risk, institutional ownership, profitability, analyst recommendations and valuation.
Insider and Institutional Ownership
76.3% of Constellation Brands shares are owned by institutional investors. Comparatively, 85.4% of Dr Pepper Snapple Group shares are owned by institutional investors. 15.6% of Constellation Brands shares are owned by company insiders. Comparatively, 0.6% of Dr Pepper Snapple Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
This table compares Constellation Brands and Dr Pepper Snapple Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Dr Pepper Snapple Group||15.62%||35.49%||8.07%|
Earnings & Valuation
This table compares Constellation Brands and Dr Pepper Snapple Group’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Constellation Brands||$8.33 billion||5.06||$2.32 billion||$8.72||25.26|
|Dr Pepper Snapple Group||$6.69 billion||3.22||$1.08 billion||$4.54||26.31|
Constellation Brands has higher revenue and earnings than Dr Pepper Snapple Group. Constellation Brands is trading at a lower price-to-earnings ratio than Dr Pepper Snapple Group, indicating that it is currently the more affordable of the two stocks.
Constellation Brands pays an annual dividend of $2.96 per share and has a dividend yield of 1.3%. Dr Pepper Snapple Group pays an annual dividend of $2.32 per share and has a dividend yield of 1.9%. Constellation Brands pays out 33.9% of its earnings in the form of a dividend. Dr Pepper Snapple Group pays out 51.1% 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. Constellation Brands has raised its dividend for 2 consecutive years and Dr Pepper Snapple Group has raised its dividend for 8 consecutive years. Dr Pepper Snapple Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk & Volatility
Constellation Brands has a beta of 0.09, indicating that its share price is 91% less volatile than the S&P 500. Comparatively, Dr Pepper Snapple Group has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500.
This is a summary of current ratings and price targets for Constellation Brands and Dr Pepper Snapple Group, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Dr Pepper Snapple Group||0||10||5||0||2.33|
Constellation Brands presently has a consensus target price of $246.00, suggesting a potential upside of 11.67%. Dr Pepper Snapple Group has a consensus target price of $117.43, suggesting a potential downside of 1.71%. Given Constellation Brands’ stronger consensus rating and higher possible upside, analysts plainly believe Constellation Brands is more favorable than Dr Pepper Snapple Group.
Constellation Brands beats Dr Pepper Snapple Group on 11 of the 17 factors compared between the two stocks.
About Constellation Brands
Constellation Brands, Inc., together with its subsidiaries, produces, imports, and markets beer, wine, and spirits in the United States, Canada, Mexico, New Zealand, and Italy. The company sells wine across various categories, including table wine, sparkling wine, and dessert wine. It offers beer primarily under the Corona Extra, Corona Light, Modelo Especial, Modelo Negra, and Pacifico brands; wine under the Black Box, Clos du Bois, Estancia, Franciscan Estate, Inniskillin, Kim Crawford, Mark West, Meiomi, Mount Veeder, Nobilo, Robert Mondavi, Ruffino, Saved, Simi, The Dreaming Tree, The Prisoner, Charles Smith, and Wild Horse brands; and sprits under the SVEDKA vodka, Black Velvet Canadian whisky, Casa Noble tequila, High West craft whisky brands. The company offers its products to wholesale distributors, retailers, on-premise locations, and government alcohol beverage control agencies. Constellation Brands, Inc. was founded in 1945 and is headquartered in Victor, New York.
About Dr Pepper Snapple Group
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.
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