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Factors Likely to Shape Keurig Dr Pepper (KDP) Q1 Earnings

Zacks Equity Research

Keurig Dr Pepper Inc. KDP is slated to report first-quarter 2019 results on May 9.

The company lagged the earnings estimates in three of the trailing four quarters, the average miss being 0.1%.

Further, the Zacks Consensus Estimate for first-quarter earnings is pegged at 23 cents, indicating a significant decline from 98 cents earned in the year-ago quarter. However, estimates remained unchanged over the past 30 days. For quarterly revenues, the consensus mark is pegged at $2.55 billion, indicating growth of 59.7% from the year-ago reported figure.

Keurig Dr Pepper, Inc Price and Consensus

Keurig Dr Pepper, Inc Price and Consensus | Keurig Dr Pepper, Inc Quote

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Let’s see how things are shaping up prior to the upcoming earnings release.

Factors in Play

Keurig Dr Pepper is witnessing softness in its Coffee Systems business due to lower volume for coffee brewers. This along with adverse impacts from changes in Allied Brands portfolio in the Packaged Beverages segment has been negatively impacting the company’s overall top line. Meanwhile, the company remains exposed to unfavorable currency movements, which has also been hurting its sales.

Keurig Dr Pepper expects the operating environment to be more challenging in 2019, marked by higher inflation and soft CSD industry volumes. Further, the company is not immune to the CSD category headwinds and higher input costs, particularly for aluminum cans. These headwinds might weigh on the company’s top and bottom lines in the first quarter.

Nevertheless, the company has been gaining from the merged benefits and robust volume/mix growth. Additionally, the company is witnessing strong in-market gains and market share growth for the carbonated soft drinks (CSD) portfolio, single-serve coffee and other categories. Also, it is gaining share in many cold beverage segments (non-CSDs), including enhanced flavored still water, premium unflavored still water, ready to drink coffee, apple juice, vegetable juice, and mixers.

In addition, Keurig Dr Pepper remains focused on partnerships and acquisitions, which form an important part of its growth strategy. All these strategic moves might prove conducive to the company in the quarter to be reported.

What the Zacks Model Says

Our proven model does not conclusively show that Keurig Dr Pepper is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Keurig Dr Pepper has a Zacks Rank #3, but its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

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:

United Natural Foods, Inc. UNFI has an Earnings ESP of +33.04% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Campbell Soup Company CPB has an Earnings ESP of +1.80% and a Zacks Rank #3.

Ollie's Bargain Outlet Holdings, Inc. OLLI has an Earnings ESP of +1.61% and a Zacks Rank #3.

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Ollie's Bargain Outlet Holdings, Inc. (OLLI) : Free Stock Analysis Report
 
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Keurig Dr Pepper, Inc (KDP) : Free Stock Analysis Report
 
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