Keurig Dr Pepper Earnings Preview: (KDP) Stock Under Pressure Leading In

Keurig Dr Pepper Inc. (NASDAQ:KDP), the beverage giant straddling coffee and refreshment categories, is set to release earnings this morning. The stock is currently caught in a bearish trend, trading below both its 50-day ($27.98) and 200-day ($31.57) simple moving averages, and down 14.48% YTD.

The upcoming earnings are particularly important given the backdrop of KDP's ambitious plans. Analysts predict earnings per share (EPS) of $0.54 for the quarter, a 5.88% increase from the same quarter last year where the company posted $0.51 per share.

Revenue is expected to come in at $4.16billion, a 6.79% growth rate from the same period Y/Y.

The elephant in the room is KDP's intention to acquire European coffee company JDE Peet's in a deal valued at approximately $18 billion. This move, announced in late August, envisions separating KDP's coffee and other beverage businesses into two independent, publicly traded entities. The aim is to unlock $400 million in annual cost savings and mitigate the impact of tariffs on coffee imports. However, this deal has been met with considerable investor skepticism, contributing to a nearly 24% decline in KDP's stock price since its announcement.

Adding another layer to the narrative is the involvement of activist hedge fund Starboard Value, which has taken a stake in KDP. Starboard is reportedly engaging in private discussions with KDP's management to improve performance and restore investor confidence. News of Starboard's involvement initially triggered a modest 3% increase in KDP's share price, suggesting the market sees potential for the activist investor to influence positive change.

KDP's recent financial performance has been a mixed bag. In the second quarter of 2025, the company reported a 6.1% year-over-year increase in net sales to $4.16 billion, with the U.S. Refreshment Beverages segment showing strong growth. Adjusted EPS of $0.49 matched analysts' expectations. This positive momentum continued from the first quarter, where KDP reported a 4.8% increase in net sales to $3.64 billion, driven by the U.S. Refreshment Beverages segment and the acquisition of GHOST Energy.

The acquisition of a 60% stake in GHOST Energy for $990 million has been a strategic win, diversifying KDP's beverage portfolio. The integration of GHOST appears to be progressing smoothly, with the brand capturing a 6.5% market share and gaining traction in the energy drink market.

However, the coffee segment has presented challenges. In the fourth quarter of 2024, while overall net sales increased by 5.2% to $4.07 billion, the U.S. Coffee segment experienced a 2.4% decline. This highlights the complexities KDP faces in navigating different beverage categories.

Price Targets

While the market appears wary of the JDE Peet's acquisition, perhaps it is underestimating the long-term potential. The separation of the coffee and beverage businesses could unlock significant value by allowing each entity to focus on its core competencies. Furthermore, the increased scale and global reach resulting from the JDE Peet's deal could create new growth opportunities and strengthen KDP's competitive position in the international market. 

Markets will be closely watching management's commentary on the JDE Peet's acquisition, the integration of GHOST Energy, and the overall outlook for the company's diverse beverage portfolio. The market's reaction will likely determine whether KDP can reverse its recent downward trend and regain investor confidence.