Market Inference Overview -- KDP Stock

Now trading at a price of $32.54, Keurig Dr Pepper has moved 0.4% so far today.

Keurig Dr Pepper returned losses of -10.6% last year, with its stock price reaching a high of $36.72 and a low of $27.66. Over the same period, the stock underperformed the S&P 500 index by -34.7%. As of April 2023, the company's 50-day average price was $30.92. 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 offered a 2.5% dividend yield over the last 12 months.

Growing Revenues With a Flat Capital Expenditure Trend:

2018 2019 2020 2021 2022 2023
Revenue (MM) $7,442 $11,120 $11,618 $12,683 $14,057 $14,750
Revenue Growth n/a 49.42% 4.48% 9.17% 10.83% 4.93%
Operating Margins 17% 21% 21% 23% 19% 20%
Net Margins 8% 11% 11% 17% 10% 13%
Net Income (MM) $589 $1,254 $1,325 $2,146 $1,436 $1,941
Net Interest Expense (MM) $401 $654 $604 $2 $693 $693
Earnings Per Share $0.53 $0.88 $0.93 $1.5 $1.01 $1.38
EPS Growth n/a 66.04% 5.68% 61.29% -32.67% 36.63%
Diluted Shares (MM) 1,098 1,419 1,422 1,428 1,428 1,375
Current Ratio 0.38 0.35 0.31 0.47 0.47 0.39
Total Debt (MM) $21,305 $14,420 $19,188 $11,882 $11,967 $18,109

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 22.6, compared to an average of 21.21 for the Consumer Staples sector. Based on its EPS guidance of $1.91, the company has a forward P/E ratio of 16.2. According to the 20.1% compound average growth rate of Keurig Dr Pepper's historical and projected earnings per share, the company's PEG ratio is 1.12. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 10.2%. On this basis, the company's PEG ratio is 2.21. This suggests that these shares are overvalued. In contrast, the market is likely undervaluing Keurig Dr Pepper in terms of its equity because its P/B ratio is 1.79 while the sector average is 4.12. The company's shares are currently trading 36.0% above their Graham number.

Analysts Give Keurig Dr Pepper an Average Rating of Buy:

The 17 analysts following Keurig Dr Pepper have set target prices ranging from $27.0 to $42.0 per share, for an average of $35.71 with a buy rating. As of April 2023, the company is trading -13.4% 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 1.7% of the company's shares are sold short. Institutions own 65.9% of the company's shares, and the insider ownership rate stands at 31.78%, suggesting a large amount of insider shareholders. The largest shareholder is Capital World Investors, whose 7% stake in the company is worth $3,068,334,037.

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.