KDP

Defensive

Keurig Dr Pepper

Price Chart

Market Data

Financials

XBRL · SEC EDGAR

2015–2025(12yr)

Revenue

Net Income

Free CF

Metric	FY 2015	FY 2016	FY 2017	FY 2017	FY 2018	FY 2019	FY 2020	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025Latest	YoY
Revenue	$6.3B	$6.4B	$4.3B	$6.7B	$7.4B	$11.1B	$11.6B	$12.7B	$14.1B	$14.8B	$15.4B	$16.6B	+8.2%
Gross Profit	$3.7B	$3.9B	$2.0B	$4.0B	$3.9B	$6.3B	$6.5B	$7.0B	$7.3B	$8.1B	$8.5B	$9.0B	+5.5%
Gross Margin	59.3%	59.9%	47.9%	59.7%	52.2%	57.0%	55.8%	55.0%	52.1%	54.5%	55.6%	54.2%	-1.4pp
Operating Income	$1.3B	$1.4B	$897.0M	$1.4B	$1.2B	$2.4B	$2.5B	$2.9B	$2.6B	$3.2B	$2.6B	$3.6B	+38.0%
Operating Margin	20.7%	22.3%	21.0%	20.7%	16.6%	21.4%	21.3%	22.8%	18.5%	21.5%	16.9%	21.5%	+4.7pp
Net Income	$764.0M	$847.0M	$378.0M	$1.1B	$586.0M	$1.3B	$1.3B	$2.1B	$1.4B	$2.2B	$1.4B	$2.1B	+44.3%
Net Margin	12.2%	13.2%	8.9%	16.1%	7.9%	11.3%	11.4%	16.9%	10.2%	14.7%	9.4%	12.5%	+3.1pp
Free Cash Flow	$812.0M	$759.0M	$1.7B	$836.0M	$1.4B	$2.1B	$2.0B	$2.5B	$2.5B	$904.0M	$1.7B	$1.5B	-9.1%
FCF Margin	12.9%	11.8%	39.4%	12.5%	19.3%	19.3%	17.2%	19.3%	17.7%	6.1%	10.8%	9.1%	-1.7pp
EPS (Diluted)	$3.97	$4.54	$0.47	$5.89	$0.53	$0.88	$0.93	$1.50	$1.01	$1.55	$1.05	$1.53	+45.7%

Total Debt$13.0B

Cash & Equiv.$1.0B

Net Debt$12.0B

3 min read

1. THE BIG PICTURE

Keurig Dr Pepper is no longer operating as a steady-state beverage provider; it has entered a period of aggressive structural engineering. By moving to acquire JDE Peet’s while simultaneously planning a total corporate separation, management is betting that two "pure-play" companies will be more valuable than the current conglomerate, even as it takes on substantial debt to get there.

2. WHERE THE RISKS HIT HARDEST

The "route-to-market advantage" provided by Keurig Dr Pepper’s 10,300-vehicle distribution fleet is threatened by supply chain volatility because Keurig Dr Pepper relies on limited or sole-source suppliers for critical raw materials like coffee, apples, and corn (10-K Item 1A). Furthermore, the "partnership model"—a stated competitive strength—is inherently fragile; in many international markets, the rights to manufacture and distribute Keurig Dr Pepper’s own key brands are held by third parties, including direct competitors (Competitive Position). Finally, the ambition to remain an "investment-grade" leader is at odds with the JDE Peet's acquisition, which introduces significant debt-related credit rating risks and a net leverage ratio of 9.7x (8-K, CAPM analysis).

3. WHAT THE NUMBERS SAY TOGETHER

While Keurig Dr Pepper’s 8.2% revenue growth outpaces giants like Coca-Cola (+1.9%) and PepsiCo (+2.3%), the underlying data reveals a business leaning heavily on pricing power rather than organic demand. In the U.S. Coffee segment, a 3.9% sales increase was only possible because an 8.0% price hike offset a 4.1% decline in actual volume (8-K). This suggests the Keurig ecosystem may be facing household penetration headwinds. Financially, Keurig Dr Pepper is hoarding cash: despite a healthy 9.0% Free Cash Flow margin, it returned 0.0% of its market cap via buybacks—ranking last among its peer group (XBRL). This lack of shareholder returns likely reflects a need to preserve capital for the upcoming $20 billion goodwill-heavy JDE Peet’s integration. Short interest stands at a modest 3.2% of the float, suggesting the market is cautious but not yet betting on a failure of the separation plan (Yahoo Finance).

4. IS IT WORTH IT AT THIS PRICE?

At an 11.2x forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations, Keurig Dr Pepper trades at a 37% discount to the peer median of 17.7x. According to CAPM analysis, this price implies the market expects long-term growth of just 0.5%. This valuation is attractively valued because Keurig Dr Pepper’s current 8.2% revenue growth and 22.5% operating margin are significantly higher than what a "stagnation" multiple suggests. However, for this price to be "right," investors must accept a net leverage of 9.7x—nearly double the debt profile of many peers—and the risk that the $44 billion in intangible assets on the balance sheet remains intact. If growth were to slow to a GDP-pace of 2.5%, the justified multiple would climb to 27.3x, suggesting significant upside if management executes the 2026 separation without a credit downgrade.

5. WHAT WOULD CHANGE THIS VIEW?

Cautious if U.S. Coffee volume declines accelerate beyond the current -4.1%, signaling that the Keurig brewer system is losing its grip on the home market.
Constructive if the JDE Peet’s acquisition closes ahead of the Q2 2026 target or if Keurig Dr Pepper initiates a buyback program, signaling that the debt burden from the acquisition is more manageable than the current 0.0% buyback yield suggests.

6. BOTTOM LINE

Structural Advantage: A massive Direct Store Delivery (DSD) network and a dominant, closed-loop coffee ecosystem.

Bottom Line: Keurig Dr Pepper is a high-leverage turnaround play that is currently priced for failure despite delivering sector-leading growth.

Source: Synthesis · LLM Analysis

4 min read

1. Top 5 Material Risks

Supply Chain and Manufacturing Disruption: Keurig Dr Pepper relies on a limited number of suppliers for raw materials, including coffee, apples, and corn. Disruptions—caused by factors ranging from climate change and geopolitical instability to labor shortages—can increase costs and interrupt product supply, directly impacting margins and operating results.
Competitive Intensity: The beverage industry is highly competitive, with multinational corporations and private-label manufacturers capable of aggressive pricing and promotional spending. Keurig Dr Pepper’s growth plans depend on increasing household penetration of Keurig brewers, and any decline in brewer sales or failure to differentiate from competitors could weaken its market position.
JDE Peet's Acquisition and Integration: The acquisition involves significant direct and indirect costs, the assumption of substantial debt, and complex integration requirements. Failure to realize anticipated synergies or successfully combine operations could lead to increased expenses, management distraction, and a decline in the market price of common stock.
Goodwill and Intangible Asset Impairment: As of December 31, 2025, Keurig Dr Pepper held $20 billion in goodwill and $24 billion in intangible assets. These assets are subject to annual impairment testing; changes in financial outlook or discount rates could trigger non-cash charges that adversely affect the Consolidated Statements of Income.
Separation of Coffee Business: The planned spin-off of the coffee business is a complex, resource-intensive process. If the separation is delayed or fails to achieve anticipated strategic benefits, Keurig Dr Pepper may incur substantial costs without realizing the intended financial improvements, potentially leading to greater stock price volatility.

2. Company-Specific Risks

Keurig System Dependency: A significant portion of revenue is tied to K-Cup pods. The business is uniquely exposed to the risk that consumers or retailers may shift to competing coffeemakers or that strategic partners may vertically integrate to manufacture their own Keurig-compatible pods, resulting in price compression.
Third-Party Bottling Reliance: Keurig Dr Pepper generates income from beverage concentrate sales to independent bottlers. These bottlers may prioritize their own products or those of competitors, and their ability to terminate agreements without cause poses a direct threat to Keurig Dr Pepper’s route-to-market.
JV Investment Constraints: The Pod Manufacturing JV agreement grants JV investors governance and consent rights that restrict Keurig Dr Pepper’s operational and corporate flexibility, while also requiring potential additional cash contributions that reduce liquidity for other purposes.
Convertible Preferred Stock Obligations: The issuance of Convertible Preferred Stock to fund the JDE Peet's Acquisition creates senior claims on liquidation proceeds and dividend obligations of 4.75% per annum, which reduces cash available for working capital and strategic activities.

3. Regulatory/Legal Risks

Packaging and Sustainability Laws: Various jurisdictions are imposing taxes or restrictions on single-use plastics and packaging materials. These regulations require increased capital expenditures to develop alternative packaging and may limit the sale of certain products.
Labeling and Warning Requirements: Laws such as California’s "Proposition 65" require warning labels if products expose consumers to substances deemed harmful. Such requirements can lead to negative consumer perception and reduced sales.
Data Privacy Compliance: Keurig Dr Pepper is subject to evolving global privacy and data protection laws. Failure to comply with these regulations or the Payment Card Industry Data Security Standard could result in substantial fines, litigation, and reputational damage.
Tax Audits: Keurig Dr Pepper is subject to income and non-income-based taxes in multiple jurisdictions. Final determinations from tax audits or disputes regarding intercompany transfer pricing could differ materially from historical provisions, impacting the effective tax rate.

4. Financial Impact Map

Supply Chain Disruption → Cost of Goods Sold → Increased input costs for agricultural commodities and packaging materials. JDE Peet's Acquisition Debt → Interest Expense / Credit Rating → Potential downgrade of investment-grade ratings and increased borrowing costs. Goodwill and Intangible Asset Impairment → Net Income → Non-cash charges recognized in the Consolidated Statements of Income. Competitive Pricing Pressure → Revenue / Gross Margin → Inability to pass through price increases or maintain promotional effectiveness. Convertible Preferred Stock Dividends → Cash Flow → 4.75% annual dividend payment reduces cash available for other corporate purposes.

Source: 10-K Item 1A · LLM Analysis

Recent Filings

Form	Filed	Period
8-K	Feb 2026	—
10-K	Feb 2026	Dec 2025
10-Q	Oct 2025	Sep 2025
14A	Apr 2025	—