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Keurig Dr Pepper's Got the Right Mix of Coffee and Soda

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Coffee and soda appears to be the right combo for Keurig Dr Pepper (KRG) , which on Thursday posted third-quarter sales that beat analysts' forecasts - and adjusted per-share earnings that matched - on strong demand for its coffee-pod systems and its staple Dr. Pepper and Canada Dry soda beverages.

On a pro-forma basis, which tallies up sales, earnings and expenses as if the two companies were together a year ago, sales came in at $2.87 billion, slightly higher than $2.86 billion recorded for the year-earlier period and the $2.8 billion expected by analysts polled by FactSet. 

The merger of Keurig Green Mountain and Dr. Pepper Snapple Group was completed in July 2018.

Adjusted net income, meantime, came in at $451 million, or 32 cents an adjusted share, vs. adjusted pro forma net income of $417 million, or 30 cents a share, in the year-ago period, the company said. Those results matched analysts' forecasts.

The company also reaffirmed its 2019 adjusted per-share earnings growth of between $1.20 and $1.22, with net sales growth of about 3%, at the high end of its long-term post-merger target of 2-3%. Free cash flow generation is expected to be in the range of $2.3 billion to $2.5 billion, the company said.

Shares of Keurig Dr Pepper popped more than 13%, or $3.77 a share, to $31.95 in morning trading on Thursday.

While Keurig Dr. Pepper isn't held by Jim Cramer in his Action Alerts PLUS portfolio, rival Pepsi is a core holding. Want to be alerted before Jim Cramer buys or sells (PEP) ? Learn more now.

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