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Keurig Dr Pepper Inc - Stock Quote KDP

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Morningstar's Keurig Dr Pepper Inc Stock Analysis

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Narrow-Moat Keurig Dr Pepper Pours Out Strong Sales, but Shares Remain Expensive

Analyst Note

| Rebecca Scheuneman, CFA |

We do not anticipate making any material changes to our $32 fair value estimate for narrow-moat Keurig Dr Pepper after reviewing its first-quarter results, with sales a bit ahead of our expectations on better pricing, offset by lower-than-expected gross margins, given ongoing inflationary pressures. Net sales for the quarter grew 6.1%, with pricing contributing 6.3%, and volumes declining 0.2%. First-quarter revenue checked in at $3.1 billion, tracking a bit ahead of our full-year estimate of $13.4 billion, given typical seasonal patterns. The strong first-quarter sales figures prompted management to increase full-year sales growth guidance to a high-single-digit percentage, from mid-single-digit previously (due to the successful pricing actions). Given lags in implementing price increases and cost savings to counteract inflation, first-quarter adjusted gross and operating margins fell 280 and 170 basis points respectively, to 52.7% and 23.8%. With this, we plan to make a modest reduction to our full-year gross margin estimate.

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Keurig Dr Pepper Inc's Company Profile

Business Description

Keurig Dr Pepper, the product of a 2018 merger between Dr Pepper Snapple and Keurig Green Mountain, is the third-largest nonalcoholic beverage company in North America. In addition to the eponyms, the firm's flagship brands include 7UP, Canada Dry, Schweppes, Mott's, and Bai. The company situates itself at different positions of the value chain depending on the segment (it reports four operating segments) and the product. It is primarily a brand owner in its beverage concentrates and Latin America beverages segments, as well as for the single-serve brewers within its coffee systems segment, and owns integrated production and distribution operations in its packaged beverages segment as well as for its K-cup pods.

53 South Avenue
Burlington, MA, 01803
T +1 781 418-7000
Sector Consumer Defensive
Industry Beverages - Non-Alcoholic
Most Recent Earnings Mar 31, 2022
Fiscal Year End Dec 31, 2021
Stock Type Aggressive Growth
Employees 27,500

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