Keurig Dr Pepper Inc. (KDP) stock analysis

P/E above its 5-year median

Keurig Dr Pepper's P/E of 35.1 is above its own 5-year median of 24.7.

P/E above the industry

Keurig Dr Pepper's P/E of 35.1 is above the Beverages median of 32.8.

EV/EBITDA above its 5-year median

Keurig Dr Pepper's EV/EBITDA of 23.3 is above its 5-year median of 20.8.

P/B below the industry

Keurig Dr Pepper's price-to-book of 2.05 is below the Beverages median of 2.94.

Trading above fair value

The share price of $38.25 is above our fair value estimate of $28.51.

Margin of safety under 20%

The price is 34.2% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 5.7% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 14.8% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew 4.1% over the last twelve months, against a 5-year average of 9.4% a year.

Growing faster than the industry

Revenue grew 43.0% over the last twelve months; the Beverages median is 4.5%.

Guidance issued

The latest outlook (2026 net sales, Nov 3, 2026) was issued for the first time, so it neither adds nor takes away points.

Gross margin slipping

Gross margin was 48.0% over the last twelve months, against 54.8% a year earlier.

Return on equity under 15%

Return on equity was 6.5% over the last twelve months and averaged 7.4% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 5.9%, below the 10% that usually covers the cost of capital.

Return on equity below the industry

Keurig Dr Pepper's return on equity of 6.5% is below the Beverages median of 16.5%.

Earnings grew over 5 years

Net income grew 9.4% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 7.1% over the last twelve months, against a 5-year average of 12.8%.

Net margin below the industry

Keurig Dr Pepper's net margin of 7.1% is below the Beverages median of 7.3%.

High debt

Debt is 114% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 56.6% five years ago to 114%.

Debt not well covered by cash flow

Operating cash flow over the last twelve months equals 10.2% of total debt; we look for at least 20%.

Interest coverage

Interest expense is not reported separately.

Short-term assets don't cover short-term debts

Current assets are 0.52 times current liabilities.

Elevated bankruptcy risk

The Altman Z-score is 0.96; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Keurig Dr Pepper paid dividends worth 2.4% of the share price over the last twelve months.

Yield below Treasuries

The 2.4% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Keurig Dr Pepper yields 2.4%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 9 fiscal years.

Covered by earnings

Dividends take 76.0% of net income.

Covered by free cash flow

Dividends take 53.8% of free cash flow.