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Keurig Dr Pepper Inc KDP

Morningstar Rating
$30.03 +0.53 (1.80%)
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Company Report

Keurig Dr Pepper Earnings: A Sales Lift From Energy and Sports Drink Partnership, but Coffee Still Weak

We plan to maintain our $32 fair value estimate on narrow-moat Keurig Dr Pepper after absorbing its 2023 earnings results, including adjusted EPS of $1.79 that topped our $1.78 estimate despite 5.4% sales growth that missed our 5.7% projection. While ready-to-drink beverages continued to deliver healthy growth on product innovation and expanding category exposure via distribution partnerships, coffee remained a drag given sluggish K-cup demand and a more promotional environment, reinforcing our concern about the segment's long-term prospects. We maintain our 10-year estimates for mid-single-digit sales CAGR and operating margins averaging in the low 20s, and view shares as fairly valued.

Price vs Fair Value

KDP is trading at a 6% discount.
Price
$30.03
Fair Value
$81.00
Uncertainty
Medium
1-Star Price
$99.70
5-Star Price
$73.50
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Keurig remains the number one single-serve brewer maker in North America, with strong retail relationships and a large installed base.

Bears

Secular headwinds in carbonated soft drink demand in the U.S. and Canada are a challenge to Keurig Dr Pepper’s long-term growth outlook.

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News

Trading Information

Previous Close Price
$29.50
Day Range
$29.3230.10
52-Week Range
$27.6635.99
Bid/Ask
$29.65 / $30.21
Market Cap
$41.67 Bil
Volume/Avg
9.8 Mil / 8.9 Mil

Key Statistics

Price/Earnings (Normalized)
17.26
Price/Sales
2.86
Dividend Yield (Trailing)
2.76%
Dividend Yield (Forward)
2.86%
Total Yield
4.46%

Company Profile

Keurig Dr Pepper was established in 2018 following a merger between Keurig Green Mountain Coffee and Dr Pepper Snapple. The company manufactures and distributes coffee systems (including coffee brewers and single-serve coffee pods) under the Keurig and Green Mountain brands, as well as ready-to-drink beverages including flavored (non-cola) sparkling soft drinks under well-known brands such as Dr Pepper, Snapple, and Canada Dry. The company controls production and route to market for its own brands through in-house manufacturing plants and distribution infrastructure and leverages these facilities to manufacture and distribute for third-party coffee and beverage brands via licensing and partnership agreements. U.S. and Canada make up 95% of revenues, with the rest from Mexico.
Sector
Consumer Defensive
Industry
Beverages - Non-Alcoholic
Stock Style Box
Mid Core
Total Number of Employees
28,100

Competitors

Valuation

Metric
KDP
MNST
KO
Price/Earnings (Normalized)
17.2638.1522.45
Price/Book Value
1.637.3910.03
Price/Sales
2.868.555.73
Price/Cash Flow
13.7535.1421.06
Price/Earnings
KDP
MNST
KO

Financial Strength

Metric
KDP
MNST
KO
Quick Ratio
0.203.600.72
Current Ratio
0.384.511.13
Interest Coverage
6.568.89
Quick Ratio
KDP
MNST
KO

Profitability

Metric
KDP
MNST
KO
Return on Assets (Normalized)
4.86%18.46%12.05%
Return on Equity (Normalized)
9.95%21.94%45.69%
Return on Invested Capital (Normalized)
7.37%21.63%17.60%
Return on Assets
KDP
MNST
KO
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