Keurig Dr Pepper Inc. (KDP Quick QuoteKDP - Free Report) reported fourth-quarter 2023 results, wherein the bottom line surpassed the Zacks Consensus Estimate. Both earnings and revenues improved year over year. Results gained from continued brand strength and significant pricing.

Shares of this currently Zacks Rank #4 (Sell) company have declined 2.5% in the past three months against the industry’s 11.7% rise.

Q4 in Details

Adjusted earnings of 55 cents per share grew 10% year over year and came above the Zacks Consensus Estimate of 54 cents.

Net sales of $3,867 million missed the consensus estimate of $3,906 million. However, the reported figure increased 1.7% from the year-ago quarter on a reported basis and 1.1% on a constant-currency (cc) basis. Net price realization grew 4.8%, with a lower volume/mix of 3.7%. Continued strength in the company's brand portfolio and in-market execution, along with elasticity across most categories, aided revenues.

In the reported quarter, Keurig Dr Pepper’s in-market performance in the Liquid Refreshment Beverages category remained sturdy, with retail dollar consumption growing 3.9% and market share expanding roughly 85% of KDP's cold beverage portfolio. This mainly reflected strength in Dr Pepper, Polar, Evian, Vita Coco, C4 Energy and Hawaiian Punch.

U.S. retail dollar consumption of manufactured pods dipped 8.6% in Iri-tracked channels during the reported quarter while KDP Manufactured shares were healthy at about 80%.

Adjusted gross profit rose 9.4% year over year to $2.2 billion. Adjusted operating income rose 6.5% to $1.1 billion in the quarter. Meanwhile, the adjusted operating margin expanded 970 basis points year over year to 28.5%.

Segmental Details

Sales in the U.S. Coffee segment declined 9.9% year over year to $1.2 billion, reflecting net price realization of 0.8% and lower volume/mix of 10.7%. Further, pod revenues fell 6.9%, including a shipment drop of 2.7%. Brewer shipments totaled 9.7 million in the 12 months ending Dec 31, 2023, representing a 10.3% decline year over year.

Sales in the U.S. Refreshment Beverages segment totaled $2.2 billion, up 6.8% year over year, reflecting higher net price realization of 7.5% and a modest drop in volume/mix of 0.7%. The results were driven by resilient category trends, market share gains, and the contribution from KDP's sales and distribution partnership with Nutrabolt for C4 Energy.

Sales in the International segment rose 11.5% year over year to $495 million, gaining from a favorable net price realization of 3.6% and a volume/mix rise of 2.9%. At cc, the segment’s net sales increased 6.5%. Also, solid momentum across markets aided the results.

Financials

As of Dec 31, 2023, Keurig Dr Pepper’s cash and cash equivalents were $267 million. KDP had long-term obligations of $9.9 billion and a total stockholders’ equity of $25.7 billion (excluding non-controlling interest).

Net cash provided by operating activities totaled $1.3 billion in 2023. The company generated a free cash flow of $913 million in the said period.

Outlook

Keurig Dr Pepper issued its 2024 view. The company expects constant-currency net sales growth in the mid-single-digit range and adjusted earnings per share (EPS) to rise in high-single-digits in 2024. Foreign currency translations are likely to be half of one percentage point headwind to both net sales and EPS growth.

Stocks to Consider

We have highlighted some better-ranked stocks from the broader Consumer Staples space, namely Church & Dwight Co. (CHD Quick QuoteCHD - Free Report) , Colgate-Palmolive (CL Quick QuoteCL - Free Report) and Inter Parfums (IPAR Quick QuoteIPAR - Free Report) .

Church & Dwight, offering a broad range of household, personal care and specialty products, currently carries a Zacks Rank #2 (Buy). CHD has a trailing four-quarter earnings surprise of 10.1%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Church & Dwight’s current financial year’s sales and earnings suggests growth of 8.7% and 6.4%, respectively, from the year-ago numbers.

Colgate, a leading consumer goods company, currently carries a Zacks Rank of 2. CL has a trailing four-quarter earnings surprise of 4.2%, on average.

The Zacks Consensus Estimate for CL’s current financial-year sales and earnings suggest growth of 3.5% and 7.7%, respectively, from the year-ago reported figures.

Inter Parfums is engaged in the manufacturing, distribution and marketing of a wide range of fragrances and related products. It currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for IPAR’s current financial-year sales and earnings indicates advancements of 20.9% and 20.2%, respectively, from the prior-year figures. It has a trailing four-quarter earnings surprise of 45.7%, on average.