Will Wall Street analysts foresee a rise or a fall in the share price of Keurig Dr Pepper?
Keurig Dr Pepper Underperforms S&P 500, but Analysts Expect Modest EPS Growth
Keurig Dr Pepper Inc. (KDP), a beverage company based in Burlington, Massachusetts, has underperformed the S&P 500 Index over the past year, with a decline of approximately 3.6%, while the S&P 500 had a broader positive trend during that period.
Despite some past earnings beats, including a +10.53% surprise in the last reported quarter, the stock does not present a compelling candidate to beat earnings estimates going forward, leading to weaker investor sentiment ahead of its earnings report.
The most accurate earnings estimate for KDP is currently lower than the consensus, indicating that analysts have become more bearish on the company's earnings prospects, reflected by a negative Earnings ESP of -0.68%.
Regarding analysts' expectations for KDP's earnings per share (EPS) growth in the current fiscal year, the market expects a year-over-year increase in earnings driven by higher revenues, but with considerable caution due to recent downward revisions in earnings estimates. This cautious outlook is further underscored by KDP having a mid-tier Zacks Rank (#3), implying moderate confidence but not a strong buy signal.
In Q2, KDP's revenue stood at $4.2 billion, up 6.1% year over year. The adjusted EPS increased 11.1% year over year to $0.49.
The consensus among the 17 analysts covering KDP stock is a "Moderate Buy." Notably, Barclays PLC (BCS) kept an "Overweight" rating on KDP and raised the price target to $39. This new price target suggests an upside potential of 19.4% from current levels. The mean price target of analysts is $38.89, representing a 19.1% premium to KDP's current price levels.
It is important to note that all information and data in this article are solely for informational purposes. No position in any of the securities mentioned in the article was held by Neha Panjwani on the date of publication.
On Jul. 24, KDP shares closed up marginally after reporting its Q2 results. On Jul. 28, Barclays PLC (BCS) made a rating and price target adjustment for KDP.
KDP offers a wide range of beverages, including soft drinks, juices, teas, mixers, water, and other beverages. The market capitalization of KDP is $45.9 billion.
For the current fiscal year, ending in December, analysts expect KDP's EPS to grow 6.8% to $2.05 on a diluted basis. Despite some uncertainty, KDP's outperformance is apparent compared to the First Trust Nasdaq Food & Beverage ETF (FTXG). FTXG has declined about 9.2% over the past year, while KDP has declined 4.3%.
In 2025, KDP stock is up 1.7%, compared to the SPX's 7.8% rise on a YTD basis. However, over the past year, KDP has underperformed the S&P 500 Index, with the S&P 500 rallying nearly 16.6%, while KDP has declined 4.3%.
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Investors interested in personal-finance or business strategies might want to reconsider investing in Keurig Dr Pepper Inc., given its underperformance against the S&P 500 over the past year, and the current lower-than-consensus earnings estimate that indicates a more bearish outlook. However, the stock has a modestly positive expected EPS growth for the current fiscal year, up 6.8% to $2.05 on a diluted basis.
