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Factors to Decide Keurig Dr Pepper's (KDP) Fate in Q2 Earnings
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Keurig Dr Pepper Inc. (KDP - Free Report) is scheduled to release second-quarter 2023 results on Jul 27, before market open. The company is expected to register top and bottom-line growth when it reports second-quarter 2023 numbers.
The Zacks Consensus Estimate for KDP’s second-quarter earnings has been unchanged in the past 30 days at 40 cents. The consensus mark for earnings suggests year-over-year growth of 2.6%. The consensus mark for quarterly revenues is pegged at $3.7 billion, indicating 4.1% growth from the year-ago period’s reported number.
In the last reported quarter, the company delivered an earnings surprise of 3.03%. KDP has delivered an earnings surprise of 0.3%, on average, in the trailing four quarters.
Keurig Dr Pepper has been witnessing significant pressures from input cost inflation, rising transportation costs and supply-chain disruptions, which have been taking a toll on its performance. These, along with the adverse impacts of higher marketing investment, have been key deterrents.
On the last reported quarter’s earnings call, management expected inflation to be the greatest challenge throughout 2023.
Driven by the headwinds related to broad-based inflationary pressure and increased marketing investment, the company has been witnessing soft operating margins.
Our model predicts the adjusted cost of sales, as a percentage of sales, to expand 20 basis points (bps) year over year to 45.5% in the second quarter. Adjusted SG&A expenses are likely to increase 4.8% year over year to $1,164.9 million, with the SG&A rate expanding 10 bps year over year. As a result, we expect the adjusted operating margin to contract 30 bps in the second quarter.
Nonetheless, Keurig Dr Pepper is gaining from continued brand strength, significant pricing actions, solid performance in its cold beverages and strong market share gains. These traits have been boosting the company’s sales performance in recent quarters.
KDP has been particularly gaining traction in the Refreshment Beverage segment for quite some time now. Higher net price realization and a rise in volume/mix have been the key contributors to the segment’s growth.
The segment has witnessed strong traction from recent innovations, most notably Dr Pepper Strawberries & Cream, effective in-market execution, and its recently announced sales and distribution partnership for C4 Energy. The continuation of this trend is expected to get reflected in the company's bottom line in the to-be-reported quarter.
KDP is also witnessing remarkable trends on the market share front. The market share expansion has been mainly driven by strength in CSDs, seltzers, energy, apple juice, coconut waters and fruit drinks. Strength in Dr Pepper, Canada Dry, A&W, Sunkist, Squirt and Crush CSDs, Polar seltzers, Vita Coco, C4 Energy, Mott's, and Hawaiian Punch have also been key contributors.
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.
Keurig Dr Pepper currently has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.
Stocks With Favorable Combination
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to deliver an earnings beat.
Molson Coors (TAP - Free Report) has an Earnings ESP of +20.90% and sports a Zacks Rank #1 at present. The company is expected to register top and bottom-line growth when it reports second-quarter 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.2 billion, which suggests growth of 10% from the figure posted in the prior-year quarter.
The Zacks Consensus Estimate for Molson Coors’ quarterly earnings has moved up 2.7% in the past seven days to $1.51 per share. The consensus mark suggests growth of 28.9% from the year-ago quarter’s reported number. TAP has delivered an earnings surprise of 32.1%, on average, in the trailing four quarters.
Beyond Meat (BYND - Free Report) has an Earnings ESP of +14.60% and a Zacks Rank #2 at present. The company is expected to record bottom-line growth when it reports second-quarter 2023 results. The Zacks Consensus Estimate for BYND’s quarterly loss has narrowed by 2 cents in the past 30 days to 81 cents per share. The consensus mark suggests a narrower loss from the $1.53 posted in the year-ago quarter.
The Zacks Consensus Estimate Beyond Meat’s quarterly revenues is pegged at $111.3 million, which indicates a decline of 24.3% from the figure reported in the prior-year quarter. BYND recorded a positive bottom-line surprise of 8.9% in the last reported quarter. Meanwhile, it has delivered a negative earnings surprise of 14.1%, on average, in the trailing four quarters.
Procter & Gamble (PG - Free Report) has an Earnings ESP of +0.09% and a Zacks Rank #3 at present. The company is slated to witness top and bottom-line growth when it reports second-quarter 2023 results. The Zacks Consensus Estimate for PG’s quarterly revenues is pegged at $19.9 billion, which suggests growth of 2.1% from the figure posted in the prior-year quarter.
The Zacks Consensus Estimate for Procter & Gamble’s quarterly earnings has been unchanged in the past 30 days at $1.32 per share, suggesting growth of 9.1% from the year-ago quarter’s reported number. PG has delivered an earnings surprise of 1.02%, on average, in the trailing four quarters.
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Factors to Decide Keurig Dr Pepper's (KDP) Fate in Q2 Earnings
Keurig Dr Pepper Inc. (KDP - Free Report) is scheduled to release second-quarter 2023 results on Jul 27, before market open. The company is expected to register top and bottom-line growth when it reports second-quarter 2023 numbers.
The Zacks Consensus Estimate for KDP’s second-quarter earnings has been unchanged in the past 30 days at 40 cents. The consensus mark for earnings suggests year-over-year growth of 2.6%. The consensus mark for quarterly revenues is pegged at $3.7 billion, indicating 4.1% growth from the year-ago period’s reported number.
In the last reported quarter, the company delivered an earnings surprise of 3.03%. KDP has delivered an earnings surprise of 0.3%, on average, in the trailing four quarters.
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 has been witnessing significant pressures from input cost inflation, rising transportation costs and supply-chain disruptions, which have been taking a toll on its performance. These, along with the adverse impacts of higher marketing investment, have been key deterrents.
On the last reported quarter’s earnings call, management expected inflation to be the greatest challenge throughout 2023.
Driven by the headwinds related to broad-based inflationary pressure and increased marketing investment, the company has been witnessing soft operating margins.
Our model predicts the adjusted cost of sales, as a percentage of sales, to expand 20 basis points (bps) year over year to 45.5% in the second quarter. Adjusted SG&A expenses are likely to increase 4.8% year over year to $1,164.9 million, with the SG&A rate expanding 10 bps year over year. As a result, we expect the adjusted operating margin to contract 30 bps in the second quarter.
Nonetheless, Keurig Dr Pepper is gaining from continued brand strength, significant pricing actions, solid performance in its cold beverages and strong market share gains. These traits have been boosting the company’s sales performance in recent quarters.
KDP has been particularly gaining traction in the Refreshment Beverage segment for quite some time now. Higher net price realization and a rise in volume/mix have been the key contributors to the segment’s growth.
The segment has witnessed strong traction from recent innovations, most notably Dr Pepper Strawberries & Cream, effective in-market execution, and its recently announced sales and distribution partnership for C4 Energy. The continuation of this trend is expected to get reflected in the company's bottom line in the to-be-reported quarter.
KDP is also witnessing remarkable trends on the market share front. The market share expansion has been mainly driven by strength in CSDs, seltzers, energy, apple juice, coconut waters and fruit drinks. Strength in Dr Pepper, Canada Dry, A&W, Sunkist, Squirt and Crush CSDs, Polar seltzers, Vita Coco, C4 Energy, Mott's, and Hawaiian Punch have also been key contributors.
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.
Keurig Dr Pepper currently has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.
Stocks With Favorable Combination
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to deliver an earnings beat.
Molson Coors (TAP - Free Report) has an Earnings ESP of +20.90% and sports a Zacks Rank #1 at present. The company is expected to register top and bottom-line growth when it reports second-quarter 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.2 billion, which suggests growth of 10% from the figure posted in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Molson Coors’ quarterly earnings has moved up 2.7% in the past seven days to $1.51 per share. The consensus mark suggests growth of 28.9% from the year-ago quarter’s reported number. TAP has delivered an earnings surprise of 32.1%, on average, in the trailing four quarters.
Beyond Meat (BYND - Free Report) has an Earnings ESP of +14.60% and a Zacks Rank #2 at present. The company is expected to record bottom-line growth when it reports second-quarter 2023 results. The Zacks Consensus Estimate for BYND’s quarterly loss has narrowed by 2 cents in the past 30 days to 81 cents per share. The consensus mark suggests a narrower loss from the $1.53 posted in the year-ago quarter.
The Zacks Consensus Estimate Beyond Meat’s quarterly revenues is pegged at $111.3 million, which indicates a decline of 24.3% from the figure reported in the prior-year quarter. BYND recorded a positive bottom-line surprise of 8.9% in the last reported quarter. Meanwhile, it has delivered a negative earnings surprise of 14.1%, on average, in the trailing four quarters.
Procter & Gamble (PG - Free Report) has an Earnings ESP of +0.09% and a Zacks Rank #3 at present. The company is slated to witness top and bottom-line growth when it reports second-quarter 2023 results. The Zacks Consensus Estimate for PG’s quarterly revenues is pegged at $19.9 billion, which suggests growth of 2.1% from the figure posted in the prior-year quarter.
The Zacks Consensus Estimate for Procter & Gamble’s quarterly earnings has been unchanged in the past 30 days at $1.32 per share, suggesting growth of 9.1% from the year-ago quarter’s reported number. PG has delivered an earnings surprise of 1.02%, on average, in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.