Keurig Dr Pepper

Financial Performance

5Y price score: (14)

10Y return: 932.1%

DATE RANGE:

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24.8

52-week range

33.8

31.26

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Required return / cost of capital

FCFF terminal growth rate

Your fair value & Margin of safety

To calculate fair value based on cost of capital and terminal growth assumptions above, please select free cash flow forecast.

Forecast:

Valuation

Free Cash Flow Yield

4.6 %

Dividend Yield TTM

2.9 %

Market cap $

$ 42,531

Price / Earnings TTM

31.4

Price / Book TTM

1.7

PEG TTM

0.7

Earnings growth and return

LTM

5YR

10YR

Total return (price & dividends)

25.8 %

0.8 %

932.1 %

Free cash flow per share growth

120.8 %

(19) %

(73.8) %

Earnings per share growth

(89) %

64.5 %

(61.5) %

Founded: 1,981

Employees: 29,000

Business Summary:Keurig Dr Pepper Inc. is a prominent beverage firm with operations spanning both the United States and global markets. The company structures its business across four primary divisions: Coffee Systems, Packaged Beverages, Beverage Concentrates, and Latin America Beverages. Its Coffee Systems division is responsible for the production and distribution of an array of finished products linked to its coffee brewing systems, including K-Cup single-serve pods, brewing machines, and specialized coffee blends. Brewers are offered for sale via external distributors, various retail outlets, and directly through its official website, keurig.com. The Packaged Beverages segment focuses on manufacturing and distributing its proprietary packaged drink labels. It also undertakes contract manufacturing for a diverse range of private label and up-and-coming beverage brands, in addition to handling distribution for its partner brands' packaged offerings. The Beverage Concentrates division produces and markets liquid concentrates for a wide portfolio of well-known brands such as Dr Pepper, Canada Dry, A&W, 7UP, Sunkist, Squirt, Big Red, RC Cola, Vernors, Snapple, Mott's, Bai, Hawaiian Punch, Clamato, Yoo-Hoo, Core, ReaLemon, evian, Vita Coco, and Mr and Mrs T mixers; this segment also processes these concentrates into syrup form. In Latin America, the Beverages segment handles the production and distribution of sparkling mineral water, flavored carbonated soft drinks, purified bottled water, and vegetable juice products, marketed under brand names like Peñafiel, Clamato, Squirt, Dr Pepper, Crush, and Aguafiel. Its extensive client base includes retailers, bottling and distribution networks, restaurants, hotel groups, office coffee service providers, and individual consumers. Established in 1981, Keurig Dr Pepper Inc. maintains its corporate headquarters in Burlington, Massachusetts.

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Fair Value Reference Estimate

Latest Earnings Call Takeaways

2026 Q2 (Aug 6, 2026)

1) Strategy & Leadership
- KDP is on track to achieve its low double-digit EPS growth guidance for 2026, supported by the successful acquisition of JDE Peet's and integration efforts.
- The company is preparing for a separation into two distinct entities, Global Coffee Co. and Beverage Co., expected to occur in early 2027.
- The search for a CEO for Global Coffee Co. is progressing well, with a focus on finding a leader with relevant experience and a strong consumer orientation.

2) Financial & Segment Results
- Total net sales grew 75% in Q2 2026, driven by the JDE Peet's acquisition; legacy KDP net sales increased by 7.3%.
- Consolidated operating income rose over 40%, and EPS increased 16% to $0.57.
- U.S. Refreshment Beverages saw double-digit growth in both net sales and operating income, with significant contributions from carbonated soft drinks and energy drinks.
- U.S. Coffee segment faced challenges with a low single-digit decline in net sales and a 25% drop in operating income due to high input costs and unfavorable mix shifts.
- JDE Peet's segment generated approximately $2.8 billion in net sales and $414 million in operating income, benefiting from effective pricing strategies and productivity savings.
- KDP International segment net sales grew at a double-digit rate, with strong performance in Mexico and Canada.

3) Problems / Headwinds
- U.S. Coffee segment experienced a decline in sales and profitability due to elevated green coffee costs, tariffs, and a slowdown in the coffee category.
- The transition of Peet's K-Cups to the JDE Peet's segment impacted U.S. Coffee's performance, creating temporary reporting challenges.
- The company anticipates continued volatility in green coffee prices, which may affect margins in the near term.

4) Operational or Product Plans
- KDP is focused on capturing cost synergies from the JDE Peet's acquisition, with a target of $400 million in total synergies.
- The company is implementing marketing campaigns to drive brewer sales and household penetration, particularly in the U.S. Coffee segment.
- Continued innovation in the energy drink category is expected, with a focus on Zero Sugar products, which are driving market share gains.

5) Guidance & Outlook / Investor Angle
- KDP reaffirms its full-year guidance, expecting net sales between $25.9 billion and $26.4 billion, with legacy KDP growth of 4% to 6%.
- EPS growth is projected to remain in the low double-digit range, with contributions from both JDE Peet's and legacy KDP.
- The company is confident in its ability to navigate the dynamic external environment while preparing for the upcoming separation.

Bottom line: KDP's strong Q2 results, driven by the successful integration of JDE Peet's and robust performance in U.S. Refreshment Beverages, position the company well for continued growth and a successful separation in 2027, despite challenges in the U.S. Coffee segment.

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