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Factors Likely to Decide Keurig's (KDP) Fate in Q3 Earnings

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Keurig Dr Pepper Inc. (KDP - Free Report) is scheduled to release third-quarter 2021 results on Oct 28, before market open. The leading beverage and coffee company in the United States and Canada is expected to register top and bottom-line growth when it reports third-quarter 2021 results.

The Zacks Consensus Estimate for third-quarter earnings is pegged at 44 cents, suggesting 12.8% 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 $3.2 billion, indicating 4.3% growth from the year-ago period’s reported number.

In the last reported quarter, the company delivered an earnings surprise of 2.7%. We note that its earnings outperformed the Zacks Consensus Estimate by 3%, 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 has been well-poised for top and bottom-line growth in the third quarter, owing to improvements in the away-from-home channel due to increased consumer mobility. It is also likely to have benefited from continued market share gains and in-market performances across categories and brands. Sales gains in the third quarter are likely to have been driven by growth across all business segments, particularly the Beverage Concentrates and Latin America Beverages segments.

Solid performance in CSDs, particularly Canada Dry, Sunkist, Dr Pepper, 7UP, A&W, and Squirt, is expected to have aided the performance of the Package Beverages segment. Growth in Core Hydration, Evian, Snapple, Polar, Bai, and Motts are also likely to have been drivers. The company’s Packaged Beverages segment has been gaining from at-home consumption trends as well as strong market share.

The company’s coffee business is expected to have benefited from volumes/mix growth driven by pod and brewer volume growth. Pod volumes have been gaining from rising at-home consumption, while brewer volume growth reflects higher consumer sales.

Keurig’s third-quarter results are expected to reflect benefits from its prudent cost-management actions. Investments in marketing, product innovation and technology upgrades are likely to have yielded its performance.

However, the company continues to witness higher input and labor costs, rising transportation and logistics costs, and labor shortages. Supply-chain disruptions have been negatively impacting the non-carb beverage unit’s sales and are likely to have acted as deterrents in the third quarter as well. The possibility of reduced or eliminated government subsidies is also likely to have weighed on its performance.

On the last reported quarter’s earnings call, management predicted that the ongoing negative demand mix is likely to continue through the rest of 2021, which indicates notable impacts on third-quarter results as well.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Keurig 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 currently has a Zacks Rank #4 (Sell) 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.

Archer Daniels Midland Company (ADM - Free Report) has an Earnings ESP of +1.84% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Estee Lauder Companies Inc. (EL - Free Report) currently has an Earnings ESP of +0.24% and a Zacks Rank #3.

The Coca-Cola Company (KO - Free Report) has an Earnings ESP of +0.75% and a Zacks Rank #3 at present.