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Keurig Dr Pepper Is Moving in the Right Direction

publication date: Nov 13, 2019
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Image Source: Keurig Dr Pepper – September 2019 IR Presentation

Unlike some of its peers, Keurig Dr Pepper is not trading at a hefty premium to its intrinsic value. Our fair value estimate for shares of KDP stands at $25, with the top end of our fair value estimate range sitting at $30 per share. As of this writing, KDP trades near ~$29 per share, which is within reason in our view. Investors are pricing in Keurig Dr Pepper’s nice underlying sales growth forecast, merger-related synergies, and serious deleveraging efforts which is why KDP trades at the upper end of its fair value estimate range, in our view. We aren’t adding KDP to either of our newsletter portfolios at this time, but should deleveraging activities continue in earnest, that may change our view of the company.

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