Keurig Dr Pepper Inc. Just Beat EPS By 20%: Here's What Analysts Think Will Happen Next

Investors in Keurig Dr Pepper Inc. (NASDAQ:KDP) had a good week, as its shares rose 7.0% to close at US$33.72 following the release of its first-quarter results. It looks like a credible result overall - although revenues of US$3.5b were in line with what the analysts predicted, Keurig Dr Pepper surprised by delivering a statutory profit of US$0.33 per share, a notable 20% above expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Keurig Dr Pepper

Following the latest results, Keurig Dr Pepper's 17 analysts are now forecasting revenues of US$15.5b in 2024. This would be a satisfactory 3.6% improvement in revenue compared to the last 12 months. Per-share earnings are expected to rise 9.1% to US$1.75. Before this earnings report, the analysts had been forecasting revenues of US$15.4b and earnings per share (EPS) of US$1.61 in 2024. So the consensus seems to have become somewhat more optimistic on Keurig Dr Pepper's earnings potential following these results.

The consensus price target was unchanged at US$36.16, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Keurig Dr Pepper at US$41.00 per share, while the most bearish prices it at US$27.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Keurig Dr Pepper's revenue growth is expected to slow, with the forecast 4.8% annualised growth rate until the end of 2024 being well below the historical 8.2% p.a. growth over the last five years. Compare this to the 59 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 4.9% per year. Factoring in the forecast slowdown in growth, it looks like Keurig Dr Pepper is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Keurig Dr Pepper's earnings potential next year. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Keurig Dr Pepper going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Keurig Dr Pepper (at least 1 which shouldn't be ignored) , and understanding these should be part of your investment process.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.