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Things to Note Ahead of Keurig Dr Pepper's (KDP) Q1 Earnings

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Keurig Dr Pepper Inc. (KDP - Free Report) is scheduled to release first-quarter 2021 results on Apr 29, before market open. The leading beverage and coffee company in the United States and Canada is likely to register top and bottom-line growth when it reports first-quarter 2021 results.

The Zacks Consensus Estimate for first-quarter earnings is pegged at 31 cents, suggesting 6.9% growth from the year-ago quarter’s reported figure. The consensus mark has been unchanged in the past 30 days. Moreover, the consensus mark for quarterly revenues is pegged at $2.7 billion, indicating 3.4% growth from the year-ago period’s reported number.

In the last reported quarter, the company delivered a negative earnings surprise of 2.5%. However, we note that its earnings outperformed the Zacks Consensus Estimate by 3.4%, on average, in the trailing four quarters.

Keurig Dr Pepper, Inc Price and EPS Surprise

 

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 benefiting from strength in all segments, except for Beverage Concentrates, and improved at-home penetration. Strong market share gains across its portfolio and accelerated household adoption of the Keurig system have been contributing to top-line growth. Also, a higher positive volume/mix has been aiding results.

Packaged Beverages have been a prime beneficiary of the increasing at-home consumption trends amid the COVID-19 pandemic as well as strong market share. Notably, it has been witnessing market share gains across several major categories — including CSD's3, premium unflavored water, shelf-stable fruit drinks, shelf-stable vegetable juice, and shelf-stable apple juice and apple sauce. The momentum in the Packaged Beverages segment is expected to have aided the top line in the first quarter.

Moreover, increased in-home coffee consumption due to the work-from-home trend and inability to visit coffee shops have been aiding the coffee business. This has been driving Keurig Dr Pepper’s performance, which is likely to have continued in the first quarter.

On the last reported quarter’s earnings call, management predicted the persistence of the increased household penetration across both hot and cold beverages portfolio. This is likely to have boosted the top line in the to-be-reported quarter.

Moreover, the company has been seeing a slow recovery in restaurant traffic, which has been supporting the Beverage Concentrate segment. Moreover, Keurig Dr Pepper’s market share growth, supported by efficient marketing and product innovation strategies, is expected to have been a driver in the first quarter. Also, Keurig Dr Pepper has been investing toward boosting distribution platforms and e-commerce operations, which is anticipated to have contributed to revenue growth in the to-be-reported quarter.

Apart from these, management has been on track with prudent cost-management actions, which is expected to have boosted the bottom line in the first quarter. Lower discretionary expenses, improved productivity and merger synergies are likely to have aided margins in the to-be-reported quarter.

However, headwinds related to the pandemic are likely to have continued in the first quarter, particularly in the away-from-home coffee channel due to the pandemic-led office closures. This is expected to have resulted in a soft trend at the company’s fountain foodservice business as well as lower consumption in the office coffee and hospitality channels.

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.
 
Although Keurig Dr Pepper currently carries a Zacks Rank #3, its Earnings ESP of -5.58% makes surprise prediction difficult.

Stocks With Favorable Combinations

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to deliver an earnings beat.

Sanderson Farms, Inc. (SAFM - Free Report) has an Earnings ESP of +3.13% and it presently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Bunge Limited (BG - Free Report) currently has an Earnings ESP of +7.19% and a Zacks Rank #2.

Archer Daniels Midland Company (ADM - Free Report) has an Earnings ESP of +2.84% and a Zacks Rank #3 at present.

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