Keurig Dr Pepper’s KDP strong momentum in beverages is helping offset temporary weakness in its coffee business, positioning the company for steady growth in 2026. KDP’s U.S. Refreshment Beverages segment continued to deliver robust results in the first quarter, supported by strong demand for carbonated soft drinks, energy drinks and sports hydration products. Management also highlighted healthy category trends, market-share gains and strong consumer response to innovation launches like Canada Dry Fruit Splash and Dr Pepper Creamy Coconut.
KDP’s beverage segment delivered impressive numbers in first-quarter 2026. U.S. Refreshment Beverages’ net sales jumped 11.9%, while operating income increased 9.8%. Volume/mix contributed 7.2 percentage points to sales growth, reflecting strong consumer demand and distribution gains. The company’s energy portfolio, including GHOST and Bloom, continued gaining market share, while zero-sugar beverages posted double-digit growth. Overall company sales rose 8.1% year over year to $3.98 billion, beating expectations.
Meanwhile, the coffee business remains under pressure due to elevated green coffee costs, tariffs and temporary trade inventory adjustments. U.S. Coffee segment sales declined 2.3%, while operating income fell 21.3% in the quarter. However, management believes these pressures are temporary and expects profitability trends to improve meaningfully in the second half of 2026 as commodity costs moderate and innovation initiatives gain traction. KDP is also investing heavily in long-term coffee growth through launches like Keurig Coffee Collective and the upcoming Keurig Alta system.
Importantly, KDP’s transformation strategy could strengthen its long-term outlook. The recently completed JDE Peet’s acquisition expands the company’s global coffee presence and is expected to generate roughly $400 million in synergies over time. At the same time, KDP plans to separate its beverage and coffee operations into two independent companies, allowing sharper strategic focus. With strong beverage momentum, improving coffee visibility and multiple growth initiatives underway, KDP appears well-positioned to navigate near-term headwinds while building long-term shareholder value.
Keurig Dr Pepper’s Zacks Rank & Share Price Performance
Shares of this Zacks Rank #3 (Hold) company have dropped 2% in the past three months compared with both the industry and the broader Consumer Staples sector, which fell 2.3% and 5.8%, respectively. However, the stock lagged the S&P 500, which rose 9.9% in the same time period.
KDP Stock's Past Three-Month Performance
Image Source: Zacks Investment Research
Is KDP a Value Play Stock?
Keurig Dr Pepper currently trades at a forward 12-month P/E ratio of 12.22X, lower than the industry average of 19.03X and the sector average of 16.81X. This valuation positions the stock at a modest discount relative to both its direct peers and the broader consumer staples sector.
KDP P/E Ratio (Forward 12 Months)
Image Source: Zacks Investment Research
Stocks to Consider
We have highlighted three better-ranked stocks from the Consumer Staples sector, namely Vita Coco Company COCO, B&G Foods BGS and Krispy Kreme, Inc. DNUT.
Vita Coco develops, manufactures, markets and distributes coconut water products under the Vita Coco brand name in the United States, Canada, Europe, the Middle East, Africa and the Asia Pacific. The company currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for COCO’s 2026 sales and EPS indicates growth of 21.4% and 47.9% from the previous year’s reported figures. Vita Coco delivered a trailing four-quarter average earnings surprise of 11.7%.
B&G Foods manufactures, sells and distributes a portfolio of shelf-stable and frozen foods and household products in the United States, Canada and Puerto Rico. It presently carries a Zacks Rank #2.
The Zacks Consensus Estimate for B&G Foods’ current fiscal-year earnings implies growth of 5.9% from the year-ago actuals. BGS delivered a trailing four-quarter negative earnings surprise of 1.6%, on average.
Krispy Kreme produces doughnuts in the United States, the United Kingdom, Ireland, Australia, New Zealand, Mexico, Canada, Japan, and internationally. At present, DNUT has a Zacks Rank of 2.
The Zacks Consensus Estimate for DNUT’s current fiscal-year sales implies a decline of 14%, and the same for earnings implies growth of 80% from the year-ago reported figures. DNUT delivered a trailing negative four-quarter earnings surprise of 6.3%, on average.
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Vita Coco Company, Inc. (COCO): Free Stock Analysis Report
B&G Foods, Inc. (BGS): Free Stock Analysis Report
Keurig Dr Pepper, Inc (KDP): Free Stock Analysis Report
Krispy Kreme, Inc. (DNUT): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).