Is It Time To Buy Keurig Dr Pepper Stock?
Keurig Dr Pepper stock (NASDAQ:KDP) currently trading around $34, and up 6% year-to-date, presents a potentially attractive buying opportunity. This is supported by our analysis, which indicates a moderate current valuation relative to the company’s neutral recent operating performance and financial condition. We assessed KDP across key areas including Growth, Profitability, Financial Stability, and Downturn Resilience, the details of which are provided below.
The broader beverage sector is currently experiencing increased investor attention, driven by its defensive characteristics amid macroeconomic uncertainties, such as those stemming from the Trump administration’s tariffs. This trend is reflected in the year-to-date gains of Coca-Cola (12%) and Monster Beverage (10%). While we recognize minor risks associated with KDP, our overall assessment remains positive.
How Does Keurig Dr Pepper’s Valuation Look vs. The S&P 500?
Going by what you pay per dollar of sales or profit, KDP stock is currently valued below the broader market.
• Keurig Dr Pepper has a price-to-sales (P/S) ratio of 3.0 vs. a figure of 3.2 for the S&P 500
• Additionally, the company’s price-to-operating income (P/EBIT) ratio is 13.7 compared to 24.3 for S&P 500
• And, it has a price-to-earnings (P/E) ratio of 20.5 vs. the benchmark’s 24.3
How Have Keurig Dr Pepper’s Revenues Grown Over Recent Years?
Keurig Dr Pepper’s Revenues have grown marginally over recent years.
• Keurig Dr Pepper has seen its top line grow at an average rate of 6.6% over the last 3 years (vs. an increase of 6.3% for the S&P 500)
• Its revenues have grown 3.6% from $15 Bil to $15 Bil in the last 12 months (vs. growth of 5.2% for S&P 500)
• Also, its quarterly revenues grew 5.2% to $4.1 Bil in the most recent quarter from $3.9 Bil a year ago (vs. 5.0% improvement for S&P 500)
How Profitable Is Keurig Dr Pepper?
Keurig Dr Pepper’s profit margins are higher than most companies in the Trefis coverage universe.
• Keurig Dr Pepper’s Operating Income over the last four quarters was $3.3 Bil, which represents a high Operating Margin of 21.6% (vs. 13.0% for S&P 500)
• Keurig Dr Pepper’s Operating Cash Flow (OCF) over this period was $2.2 Bil, pointing to a moderate OCF-to-Sales Ratio of 14.5% (vs. 15.7% for S&P 500)
Does Keurig Dr Pepper Look Financially Stable?
Keurig Dr Pepper’s balance sheet looks weak.
• Keurig Dr Pepper’s Debt figure was $17 Bil at the end of the most recent quarter, while its market capitalization is $46 Bil (as of 3/27/2025). This implies a moderate Debt-to-Equity Ratio of 38.0% (vs. 19.0% for S&P 500). [Note: A lower Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $510 Mil of the $53 Bil in Total Assets for Keurig Dr Pepper. This yields a very poor Cash-to-Assets Ratio of 1.0% (vs. 14.8% for S&P 500)
How Resilient Is KDP Stock During A Downturn?
KDP stock has been more resilient than the benchmark S&P 500 index during some of the recent downturns. While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.
Inflation Shock (2022)
• KDP stock fell 12.6% from a high of $39.28 on 17 January 2022 to $34.33 on 19 May 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 10 August 2022
• Since then, the stock has increased to a high of $40.08 on 16 August 2022 and currently trades at around $34
COVID-19 Pandemic (2020)
• KDP stock fell 33.6% from a high of $29.50 on 23 February 2020 to $19.60 on 16 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 16 July 2020
Global Financial Crisis (2008)
• KDP stock fell 55.1% from a high of $26.52 on 14 September 2008 to $11.90 on 9 March 2009, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 20 August 2009
Putting All The Pieces Together: What It Means For KDP Stock
In summary, Keurig Dr Pepper’s performance across the parameters detailed above are as follows:
• Growth: Neutral
• Profitability: Strong
• Financial Stability: Very Weak
• Downturn Resilience: Very Strong
• Overall: Neutral
Overall, Keurig Dr Pepper’s performance across our key parameters can be characterized as balanced, and this is mirrored in the stock’s moderate valuation. However, given its demonstrated resilience in challenging market environments, we view KDP stock as a favorable pick now.
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