What To Expect From Keurig Dr Pepper’s Q4?

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KDP: Keurig Dr Pepper logo
KDP
Keurig Dr Pepper

Keurig Dr Pepper (NYSE: KDP) is scheduled to report its Q4 2022 results on Thursday, February 23. We expect  KDP stock to trend higher, with Q4 revenues likely falling in line and earnings slightly above the consensus estimates. The company’s sales are expected to trend higher with better price realization. Furthermore, our forecast indicates that KDP stock has some room for growth, 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 Q4 2022 revenues to be around $3.8 billion, reflecting a 12% y-o-y growth and in line with the consensus estimate.
  • The sales growth will likely be driven by better price realization.
  • Looking at Q3 2022, Keurig Dr Pepper’s sales of $3.6 billion reflected an 11% y-o-y growth, driven by double-digit gains in Packaged Beverages, Beverage Concentrates, and Latin America Beverages, while the Coffee Systems sales were up in mid-single-digits.
  • Our dashboard on Keurig Dr Pepper Revenues has more details on the company’s segments.

(2) EPS likely to be marginally above the consensus estimates

  • Keurig Dr Pepper’s Q4 2022 adjusted earnings per share (EPS) is expected to be $0.52 per Trefis analysis, slightly above the $0.50 consensus estimate.
  • The company recorded unexpected non-recurring costs in Q4 of last year, implying better margins in Q4 of this year.
  • The company’s adjusted net income of $656 million in Q3 2022 reflected a 4% rise from its $631 million figure in the prior-year quarter, as an 11% sales growth was offset mainly by about 250 bps operating margin contraction.
  • For the full-year 2023, we expect the adjusted EPS to be higher at $1.92 than the EPS of $1.60 in 2021 and an estimated $1.70 in 2022.

(3) KDP stock looks like it has room for growth

  • We estimate Keurig Dr Pepper’s Valuation to be around $40 per share, 14% above the current market price of $35.
  • At its current levels, Keurig Dr Pepper stock is trading at 18x forward earnings, compared to the last three-year average of 21x, implying that it has room for growth.

P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year

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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.

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.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Feb 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 KDP Return -1% -2% -62%
 S&P 500 Return 1% 7% 84%
 Trefis Multi-Strategy Portfolio 1% 13% 254%

[1] Month-to-date and year-to-date as of 2/8/2023
[2] Cumulative total returns since the end of 2016

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