Keurig Dr Pepper Inc. (NASDAQ: KDP)

Sector: Consumer Defensive Industry: Beverages - Non-Alcoholic CIK: 0001418135
Market Cap 5.72 Bn
P/B 2.42
P/E 8.07
P/S 0.94
ROIC (Qtr) 5.22
Div Yield % 6.32
Rev 1y % (Qtr) 10.67
Total Debt (Qtr) 15.85 Bn
Debt/Equity (Qtr) 0.63
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About

Keurig Dr Pepper Inc., often abbreviated as KDP, is a prominent player in the North American beverage industry, known for its wide range of hot and cold beverages and single-serve brewing systems. The company boasts an impressive portfolio of iconic brands such as Dr Pepper, Canada Dry, Green Mountain Coffee Roasters, Snapple, and Mott's, among others. KDP's primary business activities revolve around the manufacture, marketing, distribution, and sale of its beverages and brewing systems. These activities span across various countries and regions,...

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Investment thesis

Bull case

  • Operating cash flow of 2.13B provides strong 23.13x coverage of stock compensation 92M, indicating sustainable incentive practices.
  • Robust free cash flow of 1.62B exceeds capital expenditure of 512M by 3.16x, indicating strong organic growth funding capability.
  • Tangible assets of 10.62B provide robust 4.79x coverage of other current liabilities 2.22B, indicating strong asset backing.
  • Operating cash flow of 2.13B provides strong 2.34x coverage of operating expenses 911M, showing operational efficiency.
  • Free cash flow of 1.62B provides healthy 0.88x coverage of inventory 1.84B, showing efficient inventory management.

Bear case

  • Operating cash flow of 2.13B barely covers its investment activities of (1.47B), with a coverage ratio of -1.45, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 2.13B provides thin coverage of dividend payments of (1.25B) with a -1.71 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 569M provide limited coverage of acquisition spending of (1.03B), which is -0.55x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Other non-current liabilities of 8.22B represent a high 0.77x of tangible assets 10.62B, suggesting significant long-term obligations without clear asset backing.
  • Retained earnings of 5.58B provide limited buffer against comprehensive income items of (24M), which is -232.54x, indicating elevated exposure to market risks.

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Beverages - Non-Alcoholic
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 KO Coca Cola Co 359.59 Bn 41.22 7.57 47.42 Bn
2 PEP Pepsico Inc 221.63 Bn 26.90 2.36 49.18 Bn
3 MNST Monster Beverage Corp 80.88 Bn 46.84 10.14 0.11 Bn
4 CCEP COCA-COLA EUROPACIFIC PARTNERS plc 48.53 Bn 20.84 1.97 12.58 Bn
5 COKE Coca-Cola Consolidated, Inc. 15.28 Bn 534.08 9.79 1.92 Bn
6 CELH Celsius Holdings, Inc. 10.33 Bn 399.18 4.86 0.86 Bn
7 KDP Keurig Dr Pepper Inc. 5.72 Bn 8.07 0.94 15.85 Bn
8 FIZZ National Beverage Corp 3.42 Bn 18.34 2.85 0.07 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.15 3.00
EV to Cash from Ops. EV/CFO 8.04 25.34
EV to Debt EV to Debt 0.52 82.79
EV to EBIT EV/EBIT 6.89 35.67
EV to EBITDA EV/EBITDA 5.76 24.62
EV to Free Cash Flow [EV/FCF] EV/FCF 9.58 40.15
EV to Market Cap EV to Market Cap 1.43 2.70
EV to Revenue EV/Rev 1.35 3.95
Price to Book Value [P/B] P/B 2.42 15.38
Price to Earnings [P/E] P/E 8.07 112.66
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.27 -230.19
Dividend Payout Ratio % Div Payout % (Qtr) 78.60 -1.98
Dividend per Basic Share Div per Share (Qtr) 0.92 0.88
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 77.31 30.31
Interest Coverage Int. cover (Qtr) 3.72 3.00
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 14.81 -59.79
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 1.61 125.83
Dividend Growth (1y) % Div 1y % (Qtr) 3.37 -6.02
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -19.93 -5.50
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -16.90 4.45
EBIT Growth (1y) % EBIT 1y % (Qtr) -19.32 70.95
EBT Growth (1y) % EBT 1y % (Qtr) -30.03 3.85
EPS Growth (1y) % EPS 1y % (Qtr) -29.52 5.85
FCF Growth (1y) % FCF 1y % (Qtr) 51.59 19.77
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 4.99 12.14
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.30 1.15
Cash Payout Ratio Cash Payout (Qtr) 0.47 0.16
Cash Ratio Cash Ratio (Qtr) 0.08 0.76
Current Ratio Curr Ratio (Qtr) 0.63 1.78
Debt to Equity Ratio Debt/Equity (Qtr) 0.63 1.22
Interest Cover Ratio Int Coverage (Qtr) 3.72 3.00
Times Interest Earned Times Interest Earned (Qtr) 3.72 3.00
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 21.20 9.71
EBIT Margin % EBIT Margin % (Qtr) 17.55 6.85
EBT Margin % EBT Margin % (Qtr) 12.84 5.02
Gross Margin % Gross Margin % (Qtr) 54.80 40.60
Net Profit Margin % Net Margin % (Qtr) 9.80 2.49