Keurig (KDP) Q4 Earnings In Line, Stock Slips On Soft View
Zacks Investment Research | Feb 28, 2019 08:57PM ET
Keurig Dr Pepper Inc. (NYSE:KDP) reported fourth-quarter 2018 results, wherein earnings matched estimates while sales missed. However, the company’s top and bottom lines improved year over year due to gains from the merger between Keurig and Dr Pepper in July. Additionally, the company witnessed strong in-market gains as well as market share growth for carbonated soft drinks (CSD), single-serve coffee and other categories, which helped it reach target for 2018.
Despite this, the Keurig Dr Pepper stock lost investors’ confidence due to the short fall in sales and a lower-than-expected earnings view for 2019. Shares of this Zacks Rank #3 (Hold) company has declined nearly 6.6% on Feb 28.
Investors seemed to be unhappy with the sales lag caused by decline in sales for the coffee systems business mainly due to lower volume for coffee brewers. Further, the company’s guidance for adjusted earnings per share was $1.20-$1.22 for 2019, which was short of the Zacks Consensus Estimate of $1.24.
Nonetheless, management pointed out that the earnings growth forecast of 15-17% was in line with the long-term target for the 2018-2021 period, which was set out at the time of the merger.
Overall, shares of Keurig Dr Pepper belonging to the Zacks Beverages – Soft Drinks industry have declined 4.6% in the past three months as compared with the S&P 500 that increased 0.7%.
Quarterly Highlights
Adjusted earnings per share of 30 cents improved 25% year over year and were in line with the Zacks Consensus Estimate. The improvement was aided by an increase in adjusted pro forma operating income and considerable decline in interest expenses due to reduced indebtedness and unwinding of several interest rate swap contracts.
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