Keurig Dr Pepper Inc.
KDP
$25.31
-1.48%
Keurig Dr Pepper Inc. is a leading beverage company operating in the non-alcoholic drinks industry. It is defined by its dual focus on coffee systems and ready-to-drink beverages, leveraging iconic brands like Keurig and Dr Pepper to maintain a strong market position.
KDP
Keurig Dr Pepper Inc.
$25.31
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Investment Opinion: Should I buy KDP Today?
Based on a synthesis of the available data, the objective assessment for KDP is a Hold. The stock's compelling valuation (low forward P/E and PEG) and strong cash flow generation support a long-term value case. However, severe negative price momentum, high short interest, and significant execution risks surrounding its major acquisition currently outweigh these fundamentals, suggesting investors should wait for a stabilization in price or clearer signs of successful integration before establishing new positions.
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KDP 12-Month Price Forecast
The analysis is neutral due to a high-conviction clash between deeply attractive valuation and profoundly negative price action. The stock is statistically cheap but lacks a near-term catalyst to reverse sentiment, making the outcome highly dependent on the successful execution of its strategic plans.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Keurig Dr Pepper Inc.'s 12-month outlook, with a consensus price target around $32.90 and implied upside of +30.0% versus the current price.
Average Target
$32.90
6 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
6
covering this stock
Price Range
$20 - $33
Analyst target range
No sufficient analyst coverage available. The provided data includes recent institutional rating actions but does not contain a consensus target price or a comprehensive ratings distribution from Wall Street analysts.
Bulls vs Bears: KDP Investment Factors
KDP presents a classic value vs. momentum conflict. Fundamentally, it appears undervalued with strong cash flow and a transformative acquisition on the horizon. However, technicals are weak, with the stock near yearly lows and facing high short interest. The investment thesis hinges on whether solid fundamentals can overcome negative market sentiment.
Bullish
- Strong Q4 Earnings Recovery: Net income of $353M vs. a loss of -$144M YoY, showing significant profit turnaround.
- Attractive Valuation Metrics: Forward P/E of 10.42 and PEG ratio of 0.41 suggest the stock is undervalued.
- Solid Free Cash Flow: $1.51B in TTM FCF provides financial flexibility for dividends and deals.
- Transformative JDE Peet's Acquisition: Deal solidifies global coffee position, could unlock long-term value.
Bearish
- Severe Recent Price Weakness: Stock down 13% in one month, significantly underperforming the S&P 500.
- Trading Near 52-Week Low: Current price of $26.33 is close to its 52-week low of $25.03.
- High Short Interest: Short ratio of 3.88 indicates significant bearish sentiment from traders.
- Moderate Capital Efficiency: ROE of 8.15% and ROA of 4.26% are adequate but not exceptional.
KDP Technical Analysis
The stock's overall trend over the past six months shows modest appreciation of 2.29%, but recent performance has been weak. Over the last month, the price has declined sharply by 13.04%, significantly underperforming the S&P 500, which fell 5.25% over the same period. The three-month performance is also negative at -5.99%, though this underperformance relative to the broader market is less pronounced at -1.37%. The current price of $26.33 is positioned near the lower end of its 52-week range, which spans from $25.03 to $36.12, indicating the stock is trading close to its recent lows. No RSI data was provided for further momentum analysis.
Beta
0.30
0.30x market volatility
Max Drawdown
-29.1%
Largest decline past year
52-Week Range
$25-$36
Price range past year
Annual Return
-28.0%
Cumulative gain past year
| Period | KDP Return | S&P 500 |
|---|---|---|
| 1m | -14.4% | -3.6% |
| 3m | -8.7% | -4.0% |
| 6m | -2.1% | -2.0% |
| 1y | -28.0% | +16.2% |
| ytd | -8.7% | -3.8% |
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KDP Fundamental Analysis
Revenue in Q4 2025 was $4.50 billion, representing a 10.54% year-over-year growth from the same quarter in 2024. Profitability has improved significantly, with Q4 2025 net income of $353 million and a net margin of 7.85%, a strong recovery from a net loss of -$144 million in Q4 2024. The company maintains a moderate debt-to-equity ratio of 0.63, indicating a manageable level of leverage. Cash flow generation is solid, with trailing twelve-month free cash flow of $1.51 billion, supporting financial flexibility and shareholder returns. Operational efficiency metrics show a return on equity (ROE) of 8.15% and a return on assets (ROA) of 4.26%, reflecting adequate but not exceptional returns on capital employed.
Quarterly Revenue
$4.5B
2025-12
Revenue YoY Growth
+0.10%
YoY Comparison
Gross Margin
+0.53%
Latest Quarter
Free Cash Flow
$1.5B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is KDP Overvalued?
Given the company's positive net income, the primary valuation metric used is the P/E ratio. The trailing P/E ratio is 18.30, while the forward P/E is lower at 10.42, suggesting expectations of earnings growth. The PEG ratio is 0.41, which is low and could indicate the stock is undervalued relative to its earnings growth prospects. Peer comparison data is not available in the provided inputs to contextualize these multiples against industry averages.
PE
18.3x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range -76x~70x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
12.7x
Enterprise Value Multiple
Investment Risk Disclosure
KDP faces several key risks. Operationally, the successful integration of the $18 billion JDE Peet's acquisition is paramount; failure to realize synergies or cultural clashes could impair value. The deal also increases financial leverage, though the current D/E of 0.63 is manageable. Market risks are pronounced, as evidenced by the stock's severe underperformance (-38.99% relative strength over 1 year) and high short ratio of 3.88, reflecting deep skepticism. Consumer staples face persistent inflation pressure on input costs, which could compress margins despite the company's pricing power. Furthermore, the planned corporate split into two entities, while potentially value-creating, adds complexity and execution risk over the medium term.
FAQ
The primary risk is the execution of the $18 billion acquisition of JDE Peet's, including integration challenges and increased leverage. Market sentiment is another major risk, with the stock showing severe relative weakness and a high short ratio of 3.88. Operational risks include input cost inflation pressuring margins, and strategic risks involve the complexity of the planned corporate split into two separate entities.
The 12-month outlook is mixed with a neutral base case. The base case (55% probability) sees a gradual recovery to the $28-$32 range as fundamentals stabilize. The bull case (25%) envisions a re-rating towards the $33-$36 range on successful acquisition integration. The bear case (20%) warns of a test of the 52-week low near $25 if integration struggles or sentiment worsens further.
Based on standard metrics, KDP appears significantly undervalued. Its forward P/E ratio of 10.42 is low for a stable consumer staples company, and its PEG ratio of 0.41 (below 1.0) traditionally indicates the stock price does not reflect its earnings growth potential. The current price of $26.33 is also near the bottom of its 52-week range ($25.03 to $36.12), further supporting the undervaluation thesis.
KDP is a complex buy. Its fundamentals are strong, with a forward P/E of 10.4 and a PEG ratio of 0.41 suggesting deep value, alongside $1.5B in annual free cash flow. However, the stock is in a severe downtrend, down 13% in a month and near its 52-week low, with high short interest. It is suitable only for patient, value-focused investors willing to tolerate near-term volatility related to its major acquisition.
KDP is unequivocally a long-term investment at this stage. The value proposition is based on a low valuation and a multi-year strategic plan involving a major acquisition and corporate split. The severe short-term price weakness and high volatility make it unsuitable for short-term trading. Investors should have a horizon of 3-5 years to allow the company's strategy to unfold and for market sentiment to potentially align with fundamentals.