Keurig Dr Pepper (NYSE: KDP) is scheduled to report its Q3 2022 results on Thursday, October 27. We expect the company to report revenue and earnings in line wih the consensus estimates. The company’s coffee systems business should do well with production ramp-up, while its packaged beverages business will likely benefit from market share gains. Better pricing is expected to bolster the operating margins. That said, our forecast indicates that KDP stock is fairly valued, as discussed below. Our interactive dashboard analysis of Keurig Dr Pepper Earnings Preview has additional details.
(1) Revenues expected to align with the consensus estimates
- Trefis estimates Keurig Dr Pepper’s Q3 2022 revenues to be around $3.6 billion, reflecting an 11% y-o-y growth and in line with the consensus estimate.
- The sales growth will likely be driven by coffee systems, given the increased production and a steady demand for K-Cups.
- Looking at Q2 2022, Keurig Dr Pepper’s sales of $3.6 billion reflected a 13% y-o-y growth, driven by a 13% rise in packaged beverages sales.
- Our dashboard on Keurig Dr Pepper Revenues has more details on the company’s segments.
(2) EPS is likely to be in line with the consensus estimates
- Keurig Dr Pepper’s Q3 2022 adjusted earnings per share (EPS) is expected to be $0.46 per Trefis analysis, aligning with the consensus estimate.
- The company’s adjusted net income of $554 million in Q2 2022 reflected an under 3% rise from its $538 million figure in the prior-year quarter, as a 13% sales growth was offset mainly by about 330 bps operating margin contraction.
- For the full-year 2022, we expect the adjusted EPS to be higher at $1.70 than the EPS of $1.60 in 2021, with better sales growth and operating margin expansion in the second half.
(3) KDP stock looks fully valued
- We estimate Keurig Dr Pepper’s Valuation to be around $39 per share, 1% above the current market price of $38.
- At its current levels, Keurig Dr Pepper stock is trading at 22x forward earnings, compared to the last three-year average of 21x, implying that it is fully valued.
- P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year
While KDP stock is fully valued, it is helpful to see how Keurig Dr Pepper Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.
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- Forecast Of The Day: Keurig Dr Pepper’s Coffee Systems Revenues
- Forecast Of The Day: Keurig Dr Pepper Coffee Systems Revenues
Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for PepsiCo vs. NVR.
|S&P 500 Return||6%||-20%||70%|
|Trefis Multi-Strategy Portfolio||2%||-25%||197%|
 Month-to-date and year-to-date as of 10/25/2022
 Cumulative total returns since the end of 2016