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Factors Likely to Influence Keurig Dr Pepper's (KDP) Q2 Earnings

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Keurig Dr Pepper Inc. (KDP - Free Report) is scheduled to release second-quarter 2021 results on Jul 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 second-quarter 2021 results.

The Zacks Consensus Estimate for second-quarter earnings is pegged at 37 cents, suggesting 12.1% growth from the year-ago quarter’s reported figure. The consensus mark has been unchanged in the past 30 days. The consensus mark for quarterly revenues is pegged at $3.1 billion, indicating 6.9% growth from the year-ago period’s reported number.

In the last reported quarter, the company delivered earnings surprise of 6.5%. We note that its earnings outperformed the Zacks Consensus Estimate by 3.1%, on average, in the trailing four quarters.

Key Factors to Note

Keurig Dr Pepper has been benefiting from strength in brands across all segments, particularly in the Packaged Beverages segment. Strong performance in Dr Pepper, A&W, Canada Dry, 7UP, Sunkist, Snapple and Clamato, among others, remain key growth drivers for this segment. Persistent growth in at-home consumption trends as well as strong market share across several major categories — CSDs, teas, juice drinks, apple juice, vegetable juice, coconut water, mixers, and premium unflavored water — are expected to have aided the top line in the second quarter.

Rising at-home coffee consumption due to the work-from-home trend has been aiding the coffee business. This has been driving Keurig Dr Pepper’s performance, which is likely to have continued in the quarter under review.

In its last earnings call, management predicted increased household penetration across both hot and cold beverage portfolios to continue in the near term. This is likely to have boosted the top line in the to-be-reported quarter.

The company has been seeing a slow recovery in restaurant traffic, which has been contributing to the Beverage Concentrate segment. Keurig Dr Pepper’s market share growth, supported by efficient marketing and product innovation strategies, is expected to have been a driver in the second quarter. The company 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.

Management has been on track with prudent cost-management actions, which is expected to have boosted the bottom line in the second quarter. Lower marketing spending, improved productivity and merger synergies are likely to have aided margins in the to-be-reported quarter.

However, the company continues to witness sluggishness in the away-from-home coffee channel, the fountain foodservice business and hospitality channels. Unfavorable currency movements remain a drag on the Latin America Beverages segment.

Keurig Dr Pepper, Inc Price and EPS Surprise

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.
 
Keurig Dr Pepper currently has a Zacks Rank #2 and Earnings ESP of 0.00%.

Stocks With Favorable Combinations

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

Medifast (MED - Free Report) has an Earnings ESP of +7.27% and, presently, a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tyson Foods (TSN - Free Report) currently has an Earnings ESP of +9.03% and a Zacks Rank #2.

Mondelez International, Inc. (MDLZ - Free Report) has an Earnings ESP of +0.78% and a Zacks Rank #2, at present.