KEURIG DR PEPPER INC.

Recommendation history

• 2026-06-03HoldHold: KDP reaffirmed 2026 net sales guidance of $25.9–$26.4 billion and low-double-digit EPS growth, while targeting roughly 4.1x leverage by year-end and an early-2027 separation. The Beverage Co. thesis is attractive—$12 billion of sales, $3.6 billion of EBITDA and mid-single-digit sales growth—but the investment case still depends on executing the JDE Peet’s integration, delivering $400 million of synergies and proving the value of two highly leveraged standalones.
• Q2 2023HoldHold: KDP delivered solid Q2 results—sales rose 6.6% to $3.8 billion, adjusted EPS increased 7.7% to $0.42, and gross margin expanded to 54.8%—with U.S. Refreshment Beverages and International outperforming. The bull case is a potential U.S. Coffee margin rebound in Q3/Q4, but the recovery remains largely prospective: coffee sales fell 5.7%, brewer shipments declined 10.9%, reported revenue may undershoot the prior coffee target, and management offered limited visibility on when shipments will converge with consumption.
• Q1 2023HoldHold: KDP delivered solid Q1 execution—sales rose 8.9% to $3.4 billion and adjusted EPS increased 3% to $0.34—but the investment case still depends on a back-half recovery that has not yet been demonstrated. U.S. Refreshment Beverages was strong, while U.S. Coffee revenue fell 1.3%, brewer shipments declined 29%, pod volumes fell 1.9%, and coffee operating margin contracted 130 bps; management reaffirmed 2023 sales growth of 5% and adjusted EPS growth of 6%-7%.
• Q2 2025HoldHold: KDP delivered a strong Q2, with constant-currency sales up 7.2%, US Refreshment Beverages up 10.5%, EPS growth in the double digits, and energy reaching 7% share. However, gross margin contracted 110 bps, leverage remains elevated at 3.3x, and management expects U.S. Coffee and operating margins to remain pressured in the second half as coffee costs, tariffs, pricing elasticity, and retailer brewer inventories weigh on results.
• Q4 2025HoldKDP delivered solid 2025 execution—constant-currency sales grew 8.6%, EPS 7.3%, and Q4 EPS 1.7% to $0.60—but the 2026 setup is execution-heavy rather than a clean buy. Standalone EPS is guided to decline to $0.36-$0.37 in Q1 before accelerating, while the low-double-digit full-year EPS growth case depends substantially on the early-April JDE Peet’s close, synergies, coffee-cost relief, and successful separation execution.
• Q1 2025HoldKDP delivered a strong Q1—constant-currency sales rose 6.4%, EPS 10.5%, and US Refreshment Beverages grew 11%—but the beat was partly aided by a roughly $0.015-per-share Vita Coco gain. The investment case remains mixed: GHOST, energy, CSDs and pricing are working, while US Coffee sales fell 3.7%, coffee operating income dropped 12.5%, gross margin contracted 170 bps, and tariffs and consumer elasticity remain unresolved.
• Q4 2023HoldKDP delivered a strong margin-led quarter, with Q4 constant-currency sales up 1.1%, gross margin expanding 450 bps, and EPS up 10%, but the investment case remains dependent on a gradual U.S. Coffee recovery. Management guides to mid-single-digit constant-currency sales growth and high-single-digit EPS growth in 2024, supported by U.S. Refreshment Beverages, International, and partnerships contributing roughly 200 bps; however, coffee sales fell 9.9% in Q4, free-cash-flow conversion will remain below normal, and analyst questioning exposed limited visibility on the recovery timing.