What's in Store Next for Keurig Dr Pepper Stock?

KDP has increased 10% year-to-date

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Keurig Dr Pepper Inc. (NASDAQ:KDP) is an American beverage conglomerate. KDP sells coffee, hot cocoa, teas, Keurig brewers, and other beverages such as sodas, juices, and soft drinks via its Dr Pepper Snapple division. Keurig Dr Pepper's portfolio of more than 125 owned, licensed, and partner brands includes Keurig, Dr Pepper, Green Mountain Coffee Roasters, Canada Dry, Snapple, Bai, Mott's, CORE, and The Original Donut Shop.

On Tuesday, Aug. 10, Keurig Dr Pepper announced that the company will host a virtual Investor Day on Friday, Oct. 1. During the event, members of the KDP executive leadership team will discuss the brand's strategic outlook and growth expectations.

Keurig Dr Pepper stock has increased approximately 18% in price year-over-year and is up 31% since bottoming out at a then five-month low of $26.67 last October. Shares of KDP have grown by 10% year-to-date. However, the equity has suffered two bear gaps since hitting a record high of $37.11 in late May. The security has recently been moving in a stiff channel contained by its ascending 120- and 160-day moving averages. Moreover, Keurig Dr Pepper stock offers a forward dividend of $0.75 and a dividend yield of 2.14%.

kdp aug 27

KDP has outperformed earnings expectations on three of its last four earnings reports. For Q3 of 2020, Keurig Dr Pepper beat analyst estimates by a margin of $0.02, reporting an EPS of $0.33. For Q4 of 2020, KDP outperformed expectations by $0.02 again, increasing its EPS to $0.39. For Q1 of 2021, Keurig Dr Pepper missed estimates by a slight margin of $0.01 and reported earnings of $0.39 per share. For Q2 of 2021, KDP reported an EPS of $0.33 and beat expectations by a margin of $0.01.

From a fundamental perspective, Keurig Dr Pepper stock’s valuation is on the higher-end, with KDP’s price-earnings ratio coming in at 30.41. However, KDP has a much better forward price-earnings ratio of 21.74, indicating substantial growth on the bottom-line. In addition, the beverage behemoth’s trailing 12-month net income is up 24% since fiscal 2020, and Keurig Dr Pepper has grown net income by 184% since 2018.

On the top-line, KDP’s growth is significantly slower, with the trailing 12-month revenues up just 5% since fiscal 2020 and just 10% since fiscal 2019. Moreover, KDP has a substandard balance sheet with $14.48 billion in total debt and just $240 million in cash. Nonetheless, Keurig Dr Pepper stock should continue to yield steady returns for investors well into the future through its dividend and conservative stock growth.

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