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KDP's Brands & Pricing Actions Seem Good: Apt to Hold the Stock?
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Keurig Dr Pepper Inc. (KDP - Free Report) has been gaining from brand strength and pricing for a while. The company’s expansion initiatives and efforts to innovate its products have been yielding benefits. KDP has been making substantial strides to reshape its portfolio in a bid to deliver growth.
Driven by such efforts, KDP has been seeing continued strength in its Refreshment Beverages segment for a while. The aforesaid business strategies poise it well for growth in the future.
Let’s delve deeper.
KDP’s Strategies Yield Results
Keurig Dr Pepper’s consumer-focused innovation model, household penetration and loyalty have been driving its market share across key categories like liquid refreshment beverages, K-Cup pods and brewers in all major markets across the United States, Mexico and Canada.
The company’s growth reflects a strategic mix of innovation, brand activity and strong commercial execution, bolstered by its ongoing focus on cost efficiency, productivity and disciplined capital management. Strength in its brand portfolio and in-market execution, along with elasticity across most categories, has been aiding KDP’s revenues.
The company announced that it will acquire a 60% stake in GHOST Lifestyle LLC, with an option to purchase the remaining 40% by 2028. GHOST Lifestyle is known for its rapidly growing GHOST Energy drinks. This reshaping approach focuses on prioritizing high-growth partnerships, with the Electrolit and La Colombe collaborations as significant examples.
Continued strength in the Refreshment Beverages segment has been aiding KDP’s overall performance for a while. Robust sales and a favorable mix of products, helped by the completion of the transition of Electrolit, have been bolstering the segment’s performance. The continuation of this trend will likely aid the top line in the future.
Image Source: Zacks Investment Research
KDP Stock’s Valuation
KDP stock is trading at an appealing valuation relative to the industry. Going by the price/earnings ratio, the stock is currently trading at 15.21 on a forward 12-month basis, lower than 17.44 for the industry. Also, the stock is trading lower than its median of 18.73.
Hindrance to KDP’s Growth Path
Keurig Dr Pepper is reeling under persistent cost pressures, including higher selling, general and administrative expenses. These, along with the adverse impacts of higher marketing investment, have been acting as deterrents.
The company is also witnessing sluggishness in the coffee segment. In third-quarter 2024, sales in the U.S. Coffee segment dropped 3.6% year over year, reflecting a net price drop of 6.3%. The muted at-home coffee category trends might be concerning.
Final Thoughts on KDP
Keurig Dr Pepper has been making strategic initiatives to tackle the aforesaid issues. Shares of KDP have gained 3.3% in the past year against the industry’s 6.8% decline.
Analysts seem quite optimistic about this energy drinks and alternative beverages marketer. The Zacks Consensus Estimate for 2025 sales and earnings per share (EPS) is currently pegged at $16.24 billion and $2.04, respectively. These estimates indicate corresponding growth of 6% and 6.3% year over year. KDP currently carries a Zacks Rank #3 (Hold).
Stocks to Consider in Consumer Staples Space
We have highlighted better-ranked stocks from the broader Consumer Staples space, namely Freshpet (FRPT - Free Report) , Ollie's Bargain Outlet (OLLI - Free Report) and Helen of Troy (HELE - Free Report) .
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and EPS indicates growth of 27.2% and 228.6%, respectively, from the prior-year levels.
Ollie's is a value retailer of brand-name merchandise at drastically reduced prices. The company currently carries a Zacks Rank of 2. OLLI has a trailing four-quarter earnings surprise of 5%, on average.
The Zacks Consensus Estimate for Ollie's current financial year’s sales and EPS implies growth of 8.3% and 13.1%, respectively, from the year-ago numbers. The consensus mark for OLLI’s EPS has been unchanged in the past 30 days.
Helen of Troy, a leading consumer products player that operates through a diversified portfolio of renowned brands, currently carries a Zacks Rank of 2. HELE has a trailing four-quarter negative earnings surprise of 4.3%, on average.
The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales and EPS indicates declines of 5.1% and 18.9%, respectively, from the year-ago quarter’s figures.
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KDP's Brands & Pricing Actions Seem Good: Apt to Hold the Stock?
Keurig Dr Pepper Inc. (KDP - Free Report) has been gaining from brand strength and pricing for a while. The company’s expansion initiatives and efforts to innovate its products have been yielding benefits. KDP has been making substantial strides to reshape its portfolio in a bid to deliver growth.
Driven by such efforts, KDP has been seeing continued strength in its Refreshment Beverages segment for a while. The aforesaid business strategies poise it well for growth in the future.
Let’s delve deeper.
KDP’s Strategies Yield Results
Keurig Dr Pepper’s consumer-focused innovation model, household penetration and loyalty have been driving its market share across key categories like liquid refreshment beverages, K-Cup pods and brewers in all major markets across the United States, Mexico and Canada.
The company’s growth reflects a strategic mix of innovation, brand activity and strong commercial execution, bolstered by its ongoing focus on cost efficiency, productivity and disciplined capital management. Strength in its brand portfolio and in-market execution, along with elasticity across most categories, has been aiding KDP’s revenues.
The company announced that it will acquire a 60% stake in GHOST Lifestyle LLC, with an option to purchase the remaining 40% by 2028. GHOST Lifestyle is known for its rapidly growing GHOST Energy drinks. This reshaping approach focuses on prioritizing high-growth partnerships, with the Electrolit and La Colombe collaborations as significant examples.
Continued strength in the Refreshment Beverages segment has been aiding KDP’s overall performance for a while. Robust sales and a favorable mix of products, helped by the completion of the transition of Electrolit, have been bolstering the segment’s performance. The continuation of this trend will likely aid the top line in the future.
Image Source: Zacks Investment Research
KDP Stock’s Valuation
KDP stock is trading at an appealing valuation relative to the industry. Going by the price/earnings ratio, the stock is currently trading at 15.21 on a forward 12-month basis, lower than 17.44 for the industry. Also, the stock is trading lower than its median of 18.73.
Hindrance to KDP’s Growth Path
Keurig Dr Pepper is reeling under persistent cost pressures, including higher selling, general and administrative expenses. These, along with the adverse impacts of higher marketing investment, have been acting as deterrents.
The company is also witnessing sluggishness in the coffee segment. In third-quarter 2024, sales in the U.S. Coffee segment dropped 3.6% year over year, reflecting a net price drop of 6.3%. The muted at-home coffee category trends might be concerning.
Final Thoughts on KDP
Keurig Dr Pepper has been making strategic initiatives to tackle the aforesaid issues. Shares of KDP have gained 3.3% in the past year against the industry’s 6.8% decline.
Analysts seem quite optimistic about this energy drinks and alternative beverages marketer. The Zacks Consensus Estimate for 2025 sales and earnings per share (EPS) is currently pegged at $16.24 billion and $2.04, respectively. These estimates indicate corresponding growth of 6% and 6.3% year over year. KDP currently carries a Zacks Rank #3 (Hold).
Stocks to Consider in Consumer Staples Space
We have highlighted better-ranked stocks from the broader Consumer Staples space, namely Freshpet (FRPT - Free Report) , Ollie's Bargain Outlet (OLLI - Free Report) and Helen of Troy (HELE - Free Report) .
Freshpet, a pet food company, has a trailing four-quarter average earnings surprise of 144.5%. FRPT currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and EPS indicates growth of 27.2% and 228.6%, respectively, from the prior-year levels.
Ollie's is a value retailer of brand-name merchandise at drastically reduced prices. The company currently carries a Zacks Rank of 2. OLLI has a trailing four-quarter earnings surprise of 5%, on average.
The Zacks Consensus Estimate for Ollie's current financial year’s sales and EPS implies growth of 8.3% and 13.1%, respectively, from the year-ago numbers. The consensus mark for OLLI’s EPS has been unchanged in the past 30 days.
Helen of Troy, a leading consumer products player that operates through a diversified portfolio of renowned brands, currently carries a Zacks Rank of 2. HELE has a trailing four-quarter negative earnings surprise of 4.3%, on average.
The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales and EPS indicates declines of 5.1% and 18.9%, respectively, from the year-ago quarter’s figures.