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Know What's in Store for Keurig Dr Pepper (KDP) in Q4 Earnings

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Keurig Dr Pepper Inc. (KDP - Free Report) is scheduled to release fourth-quarter 2020 results on Feb 25, before market open. The leading beverage and coffee company in the United States and Canada is likely to register year-over-year top and bottom-line growth when it reports fourth-quarter 2020 results.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 39 cents. Though stable in the past 30 days, it suggests 11.4% growth from the year-ago quarter’s reported figure. Moreover, the consensus mark for quarterly revenues is pegged at $3.05 billion, indicating 3.8% growth from the year-ago period’s reported number.

In the last reported quarter, the company delivered an earnings surprise of 5.4%. We note that its earnings outperformed the Zacks Consensus Estimate by nearly 4%, on average, in the trailing four quarters.

Keurig Dr Pepper, Inc Price and EPS Surprise

 

Keurig Dr Pepper, Inc Price and EPS Surprise

Keurig Dr Pepper, Inc price-eps-surprise | Keurig Dr Pepper, Inc Quote

Key Factors to Note

Keurig Dr Pepper’s Packaged Beverages and Coffee Systems businesses have been reflecting robust strength even amid the pandemic due to the renewed work trend and more time spent at home. It has been experiencing strong volume/mix, particularly in the Packaged Beverages segment, due to the pandemic-led spike in at-home consumption. Moreover, increased coffee consumption due to the work-from-home trend has been aiding the coffee business. This has been driving Keurig Dr Pepper’s performance, which is likely to have continued in the fourth quarter as well.

Additionally, the company has been seeing a slow recovery in restaurant traffic, which has been supporting the Beverage Concentrate segment. It expects increased household penetration across both hot and cold beverage portfolios to continue. This is likely to have aided revenues in the fourth quarter.

The company’s market share growth, supported by efficient marketing and product innovation strategies, is expected to have been a driver in the fourth quarter. Notably, Keurig Dr Pepper has been investing in boosting distribution platforms and e-commerce operations, which are anticipated to have contributed to revenue growth in the to-be-reported quarter.

Notably, the company has been witnessing market share gains across several major categories — CSD's3, premium unflavored water, shelf-stable fruit drinks, shelf-stable vegetable juice and shelf-stable apple juice, and apple sauce. On the last reported quarter’s earnings call, the company highlighted that it raised its carbonated and non-carbonated brand portfolios for effectively meeting the rising demand for beverage products. This is expected to get reflected in the company’s top-line results for the fourth quarter.

However, headwinds related to the pandemic are likely to have continued in the fourth quarter. This is expected to have resulted in a soft trend at the company’s fountain foodservice business as well as lower consumption at office coffee and hospitality channels. The away-from-home coffee channel has been significantly impacted by the pandemic-led office closures. Also, volume/mix has been mainly affected by a steep decline in the fountain and foodservice business, which includes the restaurant and hospitality sectors.

Apart from these, it has been reeling under unfavorable currency movements that have weighed on sales for Latin America Beverages and the Coffee Systems segments. This is expected to have persisted in the to-be-reported quarter.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Keurig Dr Pepper this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 
Although Keurig Dr Pepper carries a Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks With Favorable Combinations

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to deliver an earnings beat.

Sanderson Farms, Inc. has an Earnings ESP of +122.02% and it presently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Grocery Outlet Holding Corp. (GO - Free Report) currently has an Earnings ESP of +5.66% and a Zacks Rank #2.

Nomad Foods Limited (NOMD - Free Report) has an Earnings ESP of +2.22% and a Zacks Rank #3 at present.

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Keurig Dr Pepper, Inc (KDP) - free report >>

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