Keurig Dr Pepper -- The Essentials

Keurig Dr Pepper logged a 1.1% change during today's afternoon session, and is now trading at a price of $34.49 per share.

Keurig Dr Pepper returned losses of -11.0% last year, with its stock price reaching a high of $41.31 and a low of $30.47. Over the same period, the stock underperformed the S&P 500 index by -21.0%. As of April 2023, the company's 50-day average price was $31.8. Keurig Dr Pepper Inc. operates as a beverage company in the United States and internationally. Based in Burlington, MA, the large-cap Consumer Staples company has 28,000 full time employees. Keurig Dr Pepper has not offered a dividend during the last year.

The Company May Be Profitable, but Its Balance Sheet Is Highly Leveraged:

2020-02-27 2021-02-25 2022-02-24 2023-02-23
Revenue (MM) $11,120 $11,618 $12,683 $14,057
Gross Margins 57.0% 55.8% 55.0% 52.1%
Operating Margins 21.4% 21.9% 22.8% 19.8%
Net Margins 11.28% 11.4% 16.92% 10.22%
Net Income (MM) $1,254 $1,325 $2,146 $1,436
Net Interest Expense (MM) -$654 -$604 -$500 -$693
Depreciation & Amort. (MM) -$484 -$495 -$544 -$537
Earnings Per Share $0.88 $0.93 $1.5 $0.93
EPS Growth n/a 5.68% 61.29% -38.0%
Diluted Shares (MM) 1,419 1,422 1,428 1,404
Free Cash Flow (MM) $2,592 $2,770 $3,207 $3,048
Capital Expenditures (MM) -$118 -$314 -$333 -$211
Net Current Assets (MM) -$23,988 -$23,561 -$22,569 -$22,908
Current Ratio 0.35 0.31 0.47 0.47
Long Term Debt (MM) $12,827 $11,143 $11,578 $11,072
Net Debt / EBITDA 7.35 6.64 4.46 4.8

Keurig Dr Pepper has growing revenues and increasing reinvestment in the business and a steady stream of strong cash flows. Additionally, the company's financial statements display average operating margins with a stable trend and positive EPS growth. However, the firm suffers from slimmer gross margins than its peers and a highly leveraged balance sheet.

A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:

Keurig Dr Pepper has a trailing twelve month P/E ratio of 34.2, compared to an average of 24.36 for the Consumer Staples sector. Based on its EPS guidance of $1.92, the company has a forward P/E ratio of 16.6. Keurig Dr Pepper's PEG ratio is 3.46 on the basis of the 9.9% weighted average of the company and the broader market's EPS compound average growth rates. This suggests that the company's shares are overvalued. In contrast, the market is likely undervaluing Keurig Dr Pepper in terms of its equity because its P/B ratio is 1.93 while the sector average is 4.29. The company's shares are currently trading 67.2% above their Graham number.

Keurig Dr Pepper Has an Analyst Consensus of Some Upside Potential:

The 17 analysts following Keurig Dr Pepper have set target prices ranging from $30.0 to $45.0 per share, for an average of $38.36 with a buy rating. As of April 2023, the company is trading -17.1% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Keurig Dr Pepper has a very low short interest because 1.1% of the company's shares are sold short. Institutions own 58.2% of the company's shares, and the insider ownership rate stands at 31.62%, suggesting a large amount of insider shareholders. The largest shareholder is Vanguard Group Inc, whose 5% stake in the company is worth $2,434,943,484.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.