Keurig Dr Pepper Inc. KDP reported first-quarter 2026 results, wherein both the top and bottom lines beat the Zacks Consensus Estimate. Earnings declined year over year, while net sales posted growth.
The company’s first-quarter performance was driven by strong growth in its U.S. refreshment beverages business, supported by favorable pricing and solid demand across key categories. Coffee results were largely in line with expectations, while overall profitability was pressured by inflationary costs and higher marketing investments, partially offset by productivity savings and pricing actions. The quarter also reflected progress on strategic initiatives, including the completion of the JDE Peet’s acquisition, with management reaffirming its full-year outlook and confidence in continued execution.
KDP’s Q1 Performance
Net sales of $3.98 billion increased 9.4% year over year on a reported basis and surpassed the Zacks Consensus Estimate of $3.83 billion. On a constant currency basis, net sales increased 8.1%, driven by a 2.6% gain in volume/mix and a 5.5% benefit from favorable net pricing.
KDP reported adjusted earnings per share (EPS) of 39 cents in the quarter, beating the consensus estimate of 37 cents but declining 7.1% from the year-ago quarter’s figure. The bottom-line decline was caused by lower adjusted operating income and the impact of lapping an investment gain recorded in the prior year.
Keurig Dr Pepper, Inc Price, Consensus and EPS Surprise
Keurig Dr Pepper, Inc price-consensus-eps-surprise-chart | Keurig Dr Pepper, Inc Quote
The adjusted gross profit rose 4.9% year over year to $2.09 billion, while the adjusted gross margin fell 220 basis points (bps) to 52.5%.
The adjusted operating income declined 1.9% year over year to $838 million due to the impact of inflationary pressures and higher SG&A expenses, including increased marketing investments, partially offset by net sales growth and productivity savings. Meanwhile, the adjusted operating margin declined 220 basis points year over year to 21.1% in the quarter under review.
A Look at KDP's Segmental Details in Q1
Net sales in the U.S. Refreshment Beverages segment increased 11.9% year over year to $2.6 billion, driven by a 7.2% rise in volume/mix and a 4.7% benefit from favorable net pricing. The Zacks Consensus Estimate for sales of this segment was pegged at $2.5 billion for the quarter under review.
Adjusted operating income rose 9.8% year over year to $742 million, representing 28.5% of net sales. This growth was driven by higher net sales and productivity savings, partially offset by inflationary pressures and higher SG&A costs, including increased marketing.
Net sales in the U.S. Coffee segment declined 2.3% year over year to $857 million, reflecting a 5.9% benefit from favorable net pricing, partially offset by an 8.2% drop in volume/mix. The consensus estimate for sales of this segment was pegged at $867 million for the quarter under review.
Adjusted operating income fell 21.3% year over year to $199 million, or 23.2% of net sales. The decline was caused by the impact of cost pressures, a volume/mix drop and increased marketing expenses, partially offset by net price realization and productivity savings.
Net sales in the International segment increased 19.5% year over year to $520 million. On a constant currency basis, net sales grew 8.5%, reflecting a 9.2% benefit from favorable net pricing somewhat offset by a volume/mix decline of 0.7%.. The consensus estimate for sales of this segment was pegged at $502 billion for the quarter under review.
Adjusted operating income decreased 15.1% to $85 million, representing 16.7% of net sales. This decline was caused by the impact of cost pressures, a volume/mix drop and increased marketing expenses, partially offset by net price realization and productivity savings.
Financial Health of Keurig
As of March 31, 2026, Keurig’s cash and cash equivalents were $898 million. The company had long-term obligations of $20.8 billion and total stockholders’ equity of $29.2 billion.
Net cash provided by operating activities totaled $281 million in the first quarter of 2026, with the free cash flow amounting to $184 million.
KDP’s 2026 Outlook
KDP reaffirmed its guidance for 2026. The company expects 2026 constant-currency net sales in the range of $25.9-$26.4 billion.
The outlook for adjusted EPS growth is expected in the low-double-digit range. This outlook assumes that KDP’s core business will deliver 4-6% growth in both net sales and adjusted earnings, measured at constant currency. The forecast also includes added earnings from the JDE Peet’s acquisition. Based on current exchange rates, foreign currency movements are expected to add about one percentage point to both sales and earnings growth in 2026.
Shares of this currently Zacks Rank #1 (Strong Buy) company have gained 1.3% in the past month compared with the industry’s 2.7% rise.
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Other Stocks to Consider
Mama's Creations, Inc. MAMA manufactures and markets fresh deli-prepared foods in the United States. At present, MAMA holds a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Mama's Creations’ current fiscal-year sales and earnings implies growth of 29.8% and 66.7%, respectively, from the year-ago figures. Mama's Creations delivered a trailing four-quarter earnings surprise of 125%, on average.
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The Zacks Consensus Estimate for Tyson Foods’ current fiscal-year sales indicates growth of 4.4% from the prior-year’s reported levels.
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