When top-level insiders purchase company stock, investors should take note. It’s not a stretch to say that these individuals are some of the most informed participants in the market.
In this report, we are going to highlight some interesting insider buying at Keurig Dr Pepper Inc (KDP:US). Keurig Dr Pepper is an American beverages company that owns a diverse portfolio of carbonated and non-carbonated drinks. Its brands include Dr Pepper, Canada Dry, Schweppes, 7UP, and Big Red. It is listed on the NASDAQ Global Select Market and currently has a market capitalization of $52.78 billion.
Keurig Dr Pepper Inc: Insider Buying
Our insider transaction data shows that between May 2 and May 3, two top-level insiders at Keurig Dr Pepper bought stock. Those who picked up shares were:
- Chief Strategy Officer Justin Whitmore (65,611 shares @ $37.51 per share)
- Chief Legal Officer Anthony Shoemaker (10,000 shares @ $36.42 per share)
Combined, these two insiders spent around $2.8 million on KDP stock.
This insider activity is worth highlighting for a couple of reasons.
Firstly, Mr. Whitmore has made a very large purchase, and increased the size of his position by 67%, which indicates that he is very confident the stock is set to move higher.
It’s worth noting that Mr. Whitmore – who is responsible for enterprise strategy and transformation, mergers and acquisitions, and venture investments at the company – has considerable experience in the industry. Prior to joining the group in March 2021, he held a number of senior positions at Tyson Foods. Before this, he also worked extensively with leading consumer packaged goods companies as a management consultant at McKinsey & Company.
Secondly, two members of the management team have bought stock simultaneously. This suggests that sentiment towards the stock within the C-suite is positive.
2022 Sales Guidance Raised
Keurig Dr Pepper recently posted a solid set of results for the first quarter of 2022.
For the period, net sales came in at $3.08 billion, up 6.1% on the prior year and up 17.5% on Q1 2020. Meanwhile, diluted earnings per share came in at $0.33, flat on Q1 2021, but up 13.8% on Q1 2020.
Free cash flow for the quarter amounted to $632 million, versus $458 million a year earlier. This enabled the group to reduce its financial obligations by $350 million during the period and end the quarter with unrestricted cash of $592 million on hand.
On the back of this performance, the group raised its sales guidance for 2022. It now expects net sales growth in the high-single-digit range. As for earnings, it expects adjusted EPS growth to be in the mid-single-digit range.
Since these results, several brokers have raised their price target for the stock. For example, JP Morgan has gone from $42 to $44, while Cowen has gone from $37 to $40.
In light of these developments, we see the insider buying as a bullish indicator.