Will Supply-Chain Disruptions Mar Keurig's (KDP) Q4 Earnings?
Keurig Dr Pepper Inc. KDP is scheduled to release fourth-quarter 2021 results on Feb 24, before market open. The leading beverage and coffee company in the United States and Canada is expected to register top and bottom-line growth when it reports fourth-quarter 2021 results.
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 45 cents, suggesting 15.4% growth from the year-ago quarter’s reported figure. The consensus mark has been unchanged in the past 30 days. The consensus mark for 2021 earnings is pegged at $1.60 per share, implying growth of 14.3% from the prior-year reported figure.
The consensus mark for quarterly revenues is pegged at $3.3 billion, indicating 6.1% growth from the year-ago period’s reported number. The consensus mark for 2021 revenues is pinned at $12.6 billion, suggesting growth of 8.5% from the prior-year reported figure.
In the last reported quarter, the company’s earnings were in line with the Zacks Consensus Estimate. We note that its earnings outperformed the Zacks Consensus Estimate by 1.7%, on average, in the trailing four quarters.
Keurig Dr Pepper, Inc Price and EPS Surprise
Keurig Dr Pepper, Inc price-eps-surprise | Keurig Dr Pepper, Inc Quote
Key Factors to Note
Keurig has been well-poised for top and bottom-line growth in the fourth quarter, owing to improvements in the away-from-home channel due to increased consumer mobility. It is also likely to have benefited from continued market share gains and in-market performances across categories and brands. Sales gains in the fourth quarter are anticipated to have been driven by growth across all business segments, particularly the Beverage Concentrates and Latin America Beverages segments.
Keurig is likely to have retained its strong performance in the Packaged Beverages segment in the fourth quarter, attributable to growth in CSDs — particularly Dr Pepper, Canada Dry, Sunkist, A&W, 7UP, and Squirt — and growth in Polar and Mott's. Favorable volume/mix and higher net price realization have been aiding the segment's sales. Also, strong market share growth is anticipated to have aided the segment's performance in the fourth quarter.
KDP's carbonated soft drinks have been gaining traction, driven by core brand growth and successful innovation, particularly its new-zero sugar variety. Sunkist has become the leading fruit-flavored CSD brand, with double-digit consumption growth, followed by the solid performance in Canada Dry, A&W and Squirt. The Dr Pepper brand has also been performing well on robust consumption growth. The trends are likely to have aided KDP's results.
The company’s coffee business is expected to have benefited from volumes/mix growth, driven by pod and brewer volume growth. Pod volumes have been gaining from rising at-home consumption, while brewer volume growth reflects higher consumer sales.
On the last reported quarter’s earnings call, management anticipated constant-currency net sales growth of 7-8% for 2021. Management expected adjusted earnings growth of 13-15%, backed by improved sales and any increase in profits anticipated to be reinvested in its business.
Keurig’s fourth-quarter results are expected to reflect benefits from its prudent cost-management actions. Investments in marketing, product innovation and technology upgrades are likely to have aided its performance.
However, the company continues to witness headwinds related to input cost inflation, labor shortages, rising transportation and logistics costs, and supply-chain disruptions, which are likely to have persisted in the fourth quarter. This is anticipated to have resulted in higher-than-anticipated inflation.
The company, on its last reported quarter’s earnings call, expected inflation, including the cost of goods sold, transportation, warehousing and logistics, and SG&A, to increase 6% year over year in 2021.
Headwinds related to the supply chain are likely to have impacted the non-carb beverage unit's sales in the to-be-reported quarter. Alongside these, reduced government stimulus remains concerning.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Keurig this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Keurig currently has a Zacks Rank #4 (Sell) and Earnings ESP of 0.00%.
Stocks With Favorable Combinations
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to deliver an earnings beat.
Lowe's Companies LOW currently has an Earnings ESP of +6.81% and a Zacks Rank of 2. The company is likely to register an increase in the top and bottom line when it reports fourth-quarter fiscal 2021 results. The consensus mark for LOW’s quarterly revenues is pegged at $20.8 billion, which suggests a rise of 2.5% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Lowe's Companies’ earnings has been unchanged at $1.71 per share in the past 30 days. The consensus estimate indicates a 28.6% increase from $1.33 reported in the year-ago quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Grocery Outlet GO currently has an Earnings ESP of +8.45% and a Zacks Rank of 3. The company is likely to register a decline in the top and bottom lines when it reports fourth-quarter 2021 numbers. The consensus mark for GO’s quarterly earnings has been unchanged in the past 30 days at 20 cents per share. However, the consensus estimate suggests a 16.7% decline from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for Grocery Outlet’s quarterly revenues is pegged at $774.2 million, which suggests a decline of 4% from the figure reported in the prior-year quarter.
Foot Locker FL currently has an Earnings ESP of +8.80% and a Zacks Rank of 3. The company is likely to register top-line growth when it reports fourth-quarter fiscal 2021 earnings. The consensus mark for FL’s quarterly revenues is pegged at $2.35 billion, which suggests 7.3% growth from the figure reported in the prior-year quarter.
The consensus mark for FL’s quarterly earnings has moved up by a penny in the past seven days to $1.47 per share. However, the consensus estimate suggests a decline of 5.2% from the year-ago quarter.
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