Keurig Dr Pepper Faces Market Challenges Despite Solid Potential
Based in Burlington, Massachusetts, and Frisco, Texas, Keurig Dr Pepper Inc. (KDP) operates within the beverage sector, boasting a market cap of $44.7 billion. The company offers a wide range of popular brands in soft drinks, coffee, and specialty beverages, focusing on innovative products to meet various consumer preferences.
KDP Stock Struggles Amid Broader Market Gains
Over the past year, KDP has seen limited stock performance, gaining just 6.2% compared to the S&P 500 Index ($SPX), which surged by nearly 36.4%. Thus far in 2024, KDP shares are down 1.2%, while the S&P 500 has grown by 25.2%.
In comparison to the Invesco Food & Beverage ETF (PBJ), KDP has underperformed as well, with PBJ seeing a YTD increase of 4.5%.
Recent Performance Affected by Q3 Earnings Report
Keurig Dr Pepper’s shares dropped 12.1% in October, following the company’s announcement of modest Q3 growth. Additionally, a significant share sale by JAB Holding contributed to the downward pressure on the stock. Still, KDP showcases some positives, such as rising volume-driven sales and the acquisition of the energy drink brand Ghost. The recent decline in stock price has boosted the dividend yield to 2.8%, making it attractive for income-focused investors.
Further impacting the stock, KDP saw a decline of over 4% on October 24 after reporting Q3 net sales of $3.89 billion, slightly missing the consensus expectation of $3.92 billion.
Analysts Expect Growth and Favorable Ratings
Looking ahead, analysts predict that for the current fiscal year ending in December, KDP’s earnings per share (EPS) will grow by 7.3%, reaching $1.92 on a diluted basis. Impressively, KDP has met or exceeded earnings expectations in each of the last four quarters.
The consensus rating among 16 analysts covering KDP stock is a “Moderate Buy,” consisting of eight “Strong Buy” ratings, one “Moderate Buy,” and seven “Holds.” This represents a slightly more positive outlook compared to three months ago when only seven recommended a “Strong Buy.”
On October 29, Bill Chappell from Truist Financial Corporation (TFC) maintained a ‘Hold’ rating on KDP. In contrast, Barclays analyst Lauren Lieberman kept a ‘Buy’ rating with a price target of $39. The average price target of $38.35 indicates a potential upside of 16.5% from current levels, while the highest target of $42 suggests a possible increase of 27.6%.
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On the date of publication, Rashmi Kumari did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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