Keurig Dr Pepper (NASDAQ:KDP) Surprises With Q2 Sales
Is now the time to buy Keurig Dr Pepper? Find out in our full research report.
Keurig Dr Pepper (KDP) Q2 CY2025 Highlights:
Revenue: $4.16 billion vs analyst estimates of $4.13 billion (6.1% year-on-year growth, 0.9% beat)
Adjusted EPS: $0.49 vs analyst estimates of $0.49 (in line)
Operating Margin: 21.6%, in line with the same quarter last year
Free Cash Flow Margin: 7.5%, down from 13.8% in the same quarter last year
Sales Volumes rose 9.5% year on year (0.4% in the same quarter last year)
Market Capitalization: $45.5 billion
Commenting on the quarter, CEO Tim Cofer stated, "Our Q2 results cemented a strong first half of the year, as we drove robust performance in U.S. Refreshment Beverages, good growth in International, and sequential progress in U.S. Coffee. Today's dynamic environment puts a premium on operational excellence, which we are demonstrating while pushing ahead on our multi-year strategic agenda. Though the back half will present new challenges, we are on track to deliver our 2025 outlook and are confident in the long-term value creation ahead."
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.
Revenue Growth
Examining a company's long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
With $15.76 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 purchasing decisions. However, its scale is a double-edged sword because it's harder to find incremental growth when your existing brands have penetrated most of the market. To expand meaningfully, Keurig Dr Pepper likely needs to tweak its prices, innovate with new products, or enter new markets.
As you can see below, Keurig Dr Pepper grew its sales at a mediocre 5.9% compounded annual growth rate over the last three years, but to its credit, consumers bought more of its products.
This quarter, Keurig Dr Pepper reported year-on-year revenue growth of 6.1%, and its $4.16 billion of revenue exceeded Wall Street's estimates by 0.9%.
Looking ahead, sell-side analysts expect revenue to grow 4.8% over the next 12 months, similar to its three-year rate. This projection doesn't excite us and implies its products will see some demand headwinds.
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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 average quarterly volume growth was a healthy 2.4% over the last two years. This is pleasing because it shows consumers are purchasing more of its products.
In Keurig Dr Pepper's Q2 2025, sales volumes jumped 9.5% year on year. This result was an acceleration from its historical levels, certainly a positive signal.
Key Takeaways from Keurig Dr Pepper's Q2 Results
It was good to see Keurig Dr Pepper narrowly top analysts' revenue expectations this quarter. On the other hand, its gross margin missed. Predictably, EPS was roughly in line. Zooming out, we think this was a mixed quarter. The stock remained flat at $33.74 immediately following the results.
Is Keurig Dr Pepper an attractive investment opportunity right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it's free.
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