Keurig Dr Pepper Inc. KDP has displayed a robust graph, reflecting the continued rise in its share price in the past few months. The KDP stock’s momentum is attributed to the success of its strong brand strength and increased volumes, contributing positively to its performance. The company is making significant progress in reshaping its portfolio with the acquisition of GHOST Lifestyle, which is slated to strengthen its position in high-growth categories.

KDP is gaining from a sturdy Refreshment Beverages unit and solid market share growth. Its consumer-centric innovation model, portfolio expansion into high-growth categories, and solid route-to-market capabilities appear encouraging.

In the year-to-date period, the company’s shares have risen 5.2%, surpassing the broader Zacks Consumer Staples sector’s growth of 2.8% and the S&P 500 index’s decline of 14.1%.

At the current price of $33.60, shares of this Burlington, MA-based beverage company reflect a 12.2% discount to its recent 52-week high mark of $38.28. Also, the KDP stock mirrors an 11.6% premium from its 52-week low of $30.12.

Keurig’s YTD Price Performance

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KDP is trading above its 50-day moving average, indicating robust upward momentum and price stability. This technical strength reflects positive market perception and confidence in the company’s financial health and prospects.

Strategies Support Keurig’s Rally

KDP’s consumer-focused innovation model, supported by scorecards tracking awareness, household penetration and loyalty, has been instrumental in driving the market share gains across key categories, such as liquid refreshment beverages, K-Cup pods and brewers. This sustained growth across major markets in the United States, Mexico and Canada reflects a strategic blend of innovation, brand-building and strong commercial execution, all underpinned by KDP’s continued emphasis on cost efficiency, productivity and disciplined capital deployment.

The company recently completed the acquisition and integration of assets in Arizona while expanding its U.S. distribution reach with new territories in Tennessee. In Mexico, Keurig’s company-owned Direct Store Delivery (DSD) network offers a competitive edge in a market heavily reliant on traditional trade. Recent investments to broaden system coverage, increase selling routes and expand cooler placements have fueled robust regional growth.

KDP’s strong brand portfolio and effective in-market execution contributed to a solid fourth quarter in 2024. Revenue growth was supported by category elasticity and strategic pricing. Net sales rose 5.2% year over year (6.2% on a constant-currency basis), driven by a 5.3% increase in the volume/mix and a 0.9% benefit from favorable pricing. Market share gains were fueled by product innovation, marketing activations, and contributions from strategic partnerships and transactions, namely Electrolit and C4.

As part of its ongoing portfolio transformation, Keurig is making notable progress through its acquisition strategy, including the recent majority stake purchase of GHOST Lifestyle LLC. Known for its rapidly expanding GHOST Energy drinks, the brand now joins KDP’s distribution ecosystem, with an option to acquire the remaining 40% by 2028. This move positions Keurig to capitalize on high-growth energy drink trends by integrating a rising brand into its scalable platform.

For 2025, KDP expects mid-single-digit growth in net sales and high-single-digit growth in adjusted EPS on a constant-currency basis, inclusive of the GHOST acquisition’s contributions. Strong performance is anticipated in the carbonated soft drink (CSD) segment, supported by dynamic marketing and a robust innovation pipeline. This includes the launch of Dr Pepper Blackberry, featuring the original 23 flavors enhanced with blackberry sweetness, and 7UP Tropical, a refreshing blend of mango and peach.

Notably, Dr Pepper Blackberry reaches a milestone as KDP’s first multi-format launch across bottles, cans, fountains and frozen channels, enhancing its availability and consumer reach.

Beyond CSDs, Electrolit remains a key growth engine. Since transitioning to KDP’s DSD network, the brand has seen accelerating momentum. In 2025, KDP plans to elevate Electrolit from a Hispanic-focused offering to a mainstream contender in the sports hydration aisle while expanding availability through multi-pack and zero-sugar formats, leveraging its DSD scale to fuel growth.

Meanwhile, momentum in away-from-home coffee continues to build, with management identifying significant opportunities ahead. As pricing power strengthens, aided by proactive measures taken to address green coffee inflation, KDP is well-positioned for another strong year of performance in 2025.

KDP’s Discounted Valuation

Keurig is currently trading at a forward 12-month P/E multiple of 16.25X, exceeding the industry average of 18.68X and the S&P 500’s average of 18.58X. Currently, the KDP stock’s valuation seems attractive.

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Headwinds on Keurig’s Path

KDP continues to navigate ongoing cost headwinds, most notably elevated selling, general and administrative (SG&A) expenses. The company is also contending with persistent softness in its Coffee segment, which has impacted its overall performance.

In the fourth quarter of 2024, U.S. Coffee segment sales declined 2.4% year over year to $1.13 billion. While the segment benefited from a modest 0.7% improvement in the volume/mix, this was more than offset by a 3.1% decline in net price realization. K-Cup pod shipments rose 1.1% year over year, signaling steady demand. However, brewer shipments declined 4% due to seasonal trends and trailing consumer sell-through rates.

On the cost side, SG&A expenses rose 3.1% year over year in the fourth quarter to $1.297 billion. This contributed to an 80-basis-point contraction in the adjusted operating margin to 27.7%, underscoring the pressure on profitability.

Additionally, KDP remains exposed to currency-related volatility from its international operations. The weakening of foreign currencies against the U.S. dollar may compel the company to either adjust pricing or absorb margin pressure in overseas markets. As such, foreign currency translation is expected to pose a 1-2-percentage-point headwind to both top and bottom-line growth in the current fiscal year.

While the company continues to leverage its brand strength and operational capabilities, these macro and operational challenges highlight the need for agile cost management and sustained innovation to offset near-term pressures.

Final Words on KDP Stock

Investors should consider Keurig’s stock due to its compelling valuation, bolstered by strong execution across its core categories, with notable growth in liquid refreshment beverages, K-Cup pods and brewers. While the company faces challenges in its coffee segment, its diversified portfolio and growth initiatives help offset these headwinds. For current investors, holding on to the KDP stock appears prudent. The company currently carries a Zacks Rank #3 (Hold).

Don’t Miss These Solid Bets

We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Primo Brands Corporation PRMB, Molson Coors TAP and Fomento Economico Mexicano FMX.

Primo Brands is a branded beverage company with a focus on healthy hydration, delivering sustainably and domestically sourced diversified offerings across products, formats, channels, price points and consumer occasions, distributed primarily in every state and Canada. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Primo Brands’ current fiscal year’s sales and earnings implies growth of 146.9% and 54.5%, respectively, from the year-ago reported numbers. PRMB delivered an earnings surprise of 7.2% in the last reported quarter.

Molson Coors is a global manufacturer and seller of beer and other beverage products. It has an impressive, diverse portfolio of owned and partner brands. The company currently flaunts a Zacks Rank #1.

The Zacks Consensus Estimate for TAP’s current financial-year sales and earnings suggests growth of 0.1% and 6.9%, respectively, from the year-ago reported figures. TAP has a trailing four-quarter earnings surprise of 18.1%, on average.

Fomento Economico Mexicano is the world’s largest franchise bottler for Coca-Cola products. FMX currently has a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for FMX’s 2025 earnings implies growth of 41.5% from the previous year’s reported number. Meanwhile, sales estimates suggest a year-over-year decline of 3.6%.

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Fomento Economico Mexicano S.A.B. de C.V. (FMX) : Free Stock Analysis Report

Molson Coors Beverage Company (TAP) : Free Stock Analysis Report

Keurig Dr Pepper, Inc (KDP) : Free Stock Analysis Report

Primo Brands Corporation (PRMB) : Free Stock Analysis Report

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