Keurig Dr Pepper Earnings: Ready-To-Drink Beverages on Growth Track but Coffee Remains a Drag

Narrow-moat Keurig Dr Pepper posted solid performance in its ready-to-drink business in 2024, but its coffee unit remained in distress from soft at-home coffee trends, price competition, and high bean costs. The firm's 4% overall sales growth met our expectation, while the 8% rise in adjusted EPS outpaced our 4% estimate on cost savings. For 2025, we plan to maintain our forecasts for sales and adjusted EPS to grow 5% and 7%, respectively; both align with management outlook. We expect to raise our $33 fair value estimate by a low-single-digit percentage, rendering the stock as fully valued.