Shares of Keurig Dr Pepper (NASDAQ:KDP) crashed following the release of the company's latest earnings results. Although in the company's first-quarter results Keurig reported net sales growth of 8.9% to $3.4 billion, its net income of $467 million was down 20% year over year as higher expenses more than offset the growth in the top line. But the business still proved resilient, however, with only its U.S. coffee segment showing a year-over-year decline in revenue, falling by a modest 1.3% to $931 million for the first three months of 2023.
The company didn't change its guidance, either, still projecting revenue growth of 5% while forecasting adjusted earnings to rise between 6% to 7% for the full year.
It was a decent quarter for the stock overall but it wasn't good enough for it to avoid a free fall. Hitting a new 52-week low on Friday, shares of the consumer defensive stock are now down 14% over the past 12 months. And the stock also fell into oversold territory with a Relative Strength Index of 26. It's a rare occurrence for Keurig's stock to go oversold and so this can be a good opportunity for investors to buy the dip.
At 20 times future earnings, Keurig isn't a terribly expensive stock to own right now. Plus, its dividend yield of 2.2% if above the S&P 500 average of 1.7%. With some strong brands in its portfolio and the business demonstrating good growth, this can be an underrated stock to buy. In three years, shares of Keurig have risen by 21%.
