Beverage company Keurig Dr Pepper (NASDAQ:KDP) reported revenue ahead of Wall Street’s expectations in Q4 CY2024, with sales up 5.2% year on year to $4.07 billion. Its non-GAAP profit of $0.58 per share was in line with analysts’ consensus estimates.
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Keurig Dr Pepper (KDP) Q4 CY2024 Highlights:
- Revenue: $4.07 billion vs analyst estimates of $4.01 billion (5.2% year-on-year growth, 1.4% beat)
- Adjusted EPS: $0.58 vs analyst estimates of $0.57 (in line)
- 2025 Guidance: "net sales growth in a mid-single-digit range and Adjusted diluted EPS growth in a high-single-digit range"
- Operating Margin: 1.5%, down from 24.4% in the same quarter last year
- Free Cash Flow Margin: 16.8%, up from 3.7% in the same quarter last year
- Sales Volumes rose 2.7% year on year (-3.7% in the same quarter last year)
- Market Capitalization: $46.28 billion
Commenting on the results, CEO Tim Cofer stated, "In 2024, we delivered strong financial performance consistent with our long-term algorithm and advanced our strategy to lay the groundwork for KDP's next phase of growth. We gained market share through exciting innovation, marketing, and activation across our CSD and coffee brands, drove win-win outcomes with partner brands such as Electrolit and C4, and took bold action to extend our portfolio and route to market with the acquisition of GHOST and select territory expansions."
Company Overview
Born out of a 2018 merger between Keurig Green Mountain and Dr Pepper Snapple, Keurig Dr Pepper (NASDAQ:KDP) is a consumer staples powerhouse boasting a portfolio of beverages including sodas, coffees, and juices.
Beverages, Alcohol, and Tobacco
These companies' performance is influenced by brand strength, marketing strategies, and shifts in consumer preferences. Changing consumption patterns are particularly relevant and can be seen in the rise of cannabis, craft beer, and vaping or the steady decline of soda and cigarettes. Companies that spend on innovation to meet consumers where they are with regards to trends can reap huge demand benefits while those who ignore trends can see stagnant volumes. Finally, with the advent of the social media, the cost of starting a brand from scratch is much lower, meaning that new entrants can chip away at the market shares of established players.
Sales Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
With $15.35 billion in revenue over the past 12 months, Keurig Dr Pepper is one of the larger consumer staples companies and benefits from a well-known brand that influences consumer purchasing decisions. However, its scale is a double-edged sword because there are only so many big store chains to sell into, making it harder to find incremental growth. To accelerate sales, Keurig Dr Pepper must lean into newer products.
As you can see below, Keurig Dr Pepper’s 6.6% annualized revenue growth over the last three years was mediocre, but to its credit, consumers bought more of its products.
This quarter, Keurig Dr Pepper reported year-on-year revenue growth of 5.2%, and its $4.07 billion of revenue exceeded Wall Street’s estimates by 1.4%.
Looking ahead, sell-side analysts expect revenue to grow 5.1% over the next 12 months, a slight deceleration versus the last three years. We still think its growth trajectory is satisfactory given its scale and indicates the market is baking in success for its products.
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Volume Growth
Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
Keurig Dr Pepper’s quarterly sales volumes have, on average, stayed about the same over the last two years. This stability is normal because the quantity demanded for consumer staples products typically doesn’t see much volatility. 
In Keurig Dr Pepper’s Q4 2024, sales volumes jumped 2.7% year on year. This result was an acceleration from its historical levels, certainly a positive signal.
Key Takeaways from Keurig Dr Pepper’s Q4 Results
It was good to see Keurig Dr Pepper narrowly top analysts’ revenue expectations this quarter. EPS was in line, but 2025 EPS guidance for high-single-digit percentage EPS growth is better than expectations. Overall, this quarter was solid. The stock traded up 3.5% to $35.32 immediately after reporting.
So should you invest in Keurig Dr Pepper right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
