Please ensure Javascript is enabled for purposes of website accessibility

Keurig Dr Pepper Reaffirms Its 2020 Guidance As It Races to Keep Up With Demand

By Asit Sharma - Updated Mar 19, 2020 at 1:17PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The coronavirus outbreak should propel the beverage company's sales higher as Americans stay home more.

In the midst of the economic chaos created by the COVID-19 pandemic, a few companies appear set to prosper. Beverage manufacturer and distributor Keurig Dr Pepper (KDP -0.98%) announced on Thursday that it's reaffirming its previously issued 2020 guidance. The company scheduled a conference call with analysts for  2:30 p.m. EDT Thursday to discuss its earnings targets, and more importantly, to offer details about its plan for maintaining supply chains as consumer demand for its products rises.

In its press release, the company reiterated a range of 2020 guidance items, including adjusted diluted EPS growth of 13% to 15%, and net sales growth in 3% to 4% range. It also still intends to reduce its leverage ratio to something in the 3.5 to 3.8 range by the end of the year.

A home coffee maker is pictured with numerous coffee pods or "K-cups" nearby.

Image source: Getty Images.

Keurig Dr Pepper's sales volume looks likely to increase with the rise of at-home beverage consumption as business, government, public, and social activities are curtailed in the national effort to stem the spread of the novel coronavirus.

But perhaps less obvious is that among major beverage companies, Keurig Dr Pepper has an extremely attractive product mix for these extraordinary times. Roughly 38% of its revenue derives from its lineup of Keurig brewers and K-cups, which will surely see increased use by home-bound consumers. Bottled beverages likewise make up roughly 44% of its business. Beverage concentrates, which will likely see a slump in orders in the near term as restaurants and foodservice businesses experience sharp reductions in traffic, make up less than 13% of Keurig Dr Pepper's sales.

Based on this, it's reasonable to expect this consumer-oriented business will benefit from a tailwind for a few months in the least. The company now finds itself dealing with a good problem to have -- how to ensure it can push its products to distribution points to keep up with an expected surge in retail sales.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Keurig Green Mountain, Inc. Stock Quote
Keurig Green Mountain, Inc.
$35.18 (-0.98%) $0.35

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.