Market is not liking Keurig Dr Pepper's (NASDAQ:KDP) earnings decline as stock retreats 3.2% this week

It's easy to match the overall market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Unfortunately the Keurig Dr Pepper Inc. (NASDAQ:KDP) share price slid 11% over twelve months. That falls noticeably short of the market decline of around 1.7%. The silver lining (for longer term investors) is that the stock is still 10% higher than it was three years ago.

If the past week is anything to go by, investor sentiment for Keurig Dr Pepper isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for Keurig Dr Pepper

SWOT Analysis for Keurig Dr Pepper

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Unhappily, Keurig Dr Pepper had to report a 45% decline in EPS over the last year. This fall in the EPS is significantly worse than the 11% the share price fall. So the market may not be too worried about the EPS figure, at the moment -- or it may have expected earnings to drop faster.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

Keurig Dr Pepper shareholders are down 8.8% for the year, (even including dividends), but the broader market is up 1.7%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Investors are up over three years, booking 6% per year, much better than the more recent returns. Sometimes when a good quality long term winner has a weak period, it's turns out to be an opportunity, but you really need to be sure that the quality is there. It's always interesting to track share price performance over the longer term. But to understand Keurig Dr Pepper better, we need to consider many other factors. For instance, we've identified 4 warning signs for Keurig Dr Pepper (1 is significant) that you should be aware of.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.