KD

Keurig Dr Pepper Inc

KDP
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Keurig Dr Pepper Inc AI Insights

Informational only. Not investment advice.
As of 2025-12-12

Snapshot

  • Goodwill & intangibles of 44.0B represent 174% of equity (25.3B) - tangible book value is NEGATIVE (-18.7B). Material impairment risk if brands underperform.[Goodwill and Other Intangible Assets]
  • Operating margin TTM 21.5% vs industry median 13.2% - 1.6x advantage drives 3.5B operating income on 16.2B revenue despite modest 6% 3Y revenue CAGR.[Operating Margin TTM]
  • Working capital NEGATIVE (-2.8B) with AP of 3.0B exceeding inventory (1.8B) - supplier financing funds operations, reducing capital needs.[Working Capital]

Watch Triggers

  • Goodwill and Other Intangible Assets: Any impairment charge or write-down announcement — 44B intangibles vs 25B equity - even 10% impairment erases 17% of equity
  • Operating Margin TTM: Decline below 18% — Margin compression signals pricing power erosion or input cost pressure
  • Interest Expense TTM: Increase above 900M or coverage below 3.5x — Debt service consuming FCF limits dividend growth and deleveraging

Bull Case

Brand portfolio generates 21.5% operating margins with 55% gross margins - pricing power evident in 9.3% gross profit growth outpacing 6% revenue growth TTM.

Operating Margin TTMGross Margin TTMGross Profit 1Y Growth

Negative working capital (-2.8B) and low capex (529M) convert 75% of operating cash flow to FCF - sustainable dividend (5.9% payout ratio) with deleveraging optionality.

Working CapitalFree Cash Flow TTMCapital Expenditure TTM

Bear Case

Intangibles 174% of equity creates binary impairment risk - any brand weakness or acquisition write-down directly hits book value already negative on tangible basis.

Goodwill and Other Intangible AssetsTangible Book ValueCommon Stockholders Equity

Net debt 15.3B at 4.3x EBITDA with 763M annual interest - rising rates pressure FCF conversion while limiting M&A flexibility in consolidating industry.

Net DebtEBITDA TTMInterest Expense TTM

Bull vs Bear Balance

AI-generated sentiment analysis based on fundamental metrics and market conditions.

BearBull
55%

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Forward Thesis

FCF margin expansion likely as integration synergies mature and capex intensity remains low at 3.3% of revenue

1-3ymed
  • Capex TTM only 529M (3.3% of revenue) vs asset-light model
  • Operating margin 21.5% with room for SG&A optimization
  • Negative working capital provides self-funding growth
FCF TTM 1.6B on 16.2B revenue (9.9% FCF margin)Gross profit 1Y growth 9.3% outpacing revenueInterest expense 763M manageable at 4.3x coverage
Valuation Context
Caveats

Public Strategies Rankings

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