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Assessing Keurig Dr Pepper Inc.'s (NYSE:KDP) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess KDP's latest performance announced on 31 March 2019 and evaluate these figures to its historical trend and industry movements.
Was KDP's recent earnings decline worse than the long-term trend and the industry?
KDP's trailing twelve-month earnings (from 31 March 2019) of US$728m has declined by -17% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 21%, indicating the rate at which KDP is growing has slowed down. Why is this? Well, let's look at what's going on with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Keurig Dr Pepper has fallen short of achieving a 20% return on equity (ROE), recording 3.2% instead. Furthermore, its return on assets (ROA) of 2.7% is below the US Beverage industry of 9.0%, indicating Keurig Dr Pepper's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Keurig Dr Pepper’s debt level, has declined over the past 3 years from 10% to 4.8%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 8.3% to 69% over the past 5 years.
What does this mean?
Keurig Dr Pepper's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors influencing its business. I recommend you continue to research Keurig Dr Pepper to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for KDP’s future growth? Take a look at our free research report of analyst consensus for KDP’s outlook.
- Financial Health: Are KDP’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.