As of June 14, 2025, Keurig Dr Pepper Inc's estimated intrinsic value ranges from $21.65 to $48.55 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $48.55 | +47.0% |
| Discounted Cash Flow (5Y) | $40.21 | +21.8% |
| Dividend Discount Model (Multi-Stage) | $26.99 | -18.3% |
| Dividend Discount Model (Stable) | $21.65 | -34.4% |
| Earnings Power Value | $22.28 | -32.5% |
Is Keurig Dr Pepper Inc (KDP) undervalued or overvalued?
With the current market price at $33.02, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Keurig Dr Pepper Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.49 | 0.54 |
| Cost of equity | 6.1% | 7.9% |
| Cost of debt | 4.0% | 4.9% |
| Tax rate | 21.9% | 22.8% |
| Debt/Equity ratio | 0.37 | 0.37 |
| After-tax WACC | 5.3% | 6.8% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $40 | $70,736M | 82.8% |
| 10-Year Growth | $49 | $82,064M | 69.8% |
| 5-Year EBITDA | $28 | $53,555M | 77.3% |
| 10-Year EBITDA | $36 | $64,629M | 61.6% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $2,767M |
| Discount Rate (WACC) | 6.8% - 5.3% |
| Enterprise Value | $40,616M - $52,140M |
| Net Debt | $16,123M |
| Equity Value | $24,493M - $36,017M |
| Outstanding Shares | 1,358M |
| Fair Value | $18 - $27 |
| Selected Fair Value | $22.28 |
| Metric | Value |
|---|---|
| Market Capitalization | $44847M |
| Enterprise Value | $60970M |
| Trailing P/E | 29.82 |
| Forward P/E | 26.98 |
| Trailing EV/EBITDA | 12.35 |
| Current Dividend Yield | 269.13% |
| Dividend Growth Rate (5Y) | 9.00% |
| Debt-to-Equity Ratio | 0.37 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $14.57 |
| Discounted Cash Flow (5Y) | 25% | $10.05 |
| Dividend Discount Model (Multi-Stage) | 20% | $5.40 |
| Dividend Discount Model (Stable) | 15% | $3.25 |
| Earnings Power Value | 10% | $2.23 |
| Weighted Average | 100% | $35.49 |
Based on our comprehensive valuation analysis, Keurig Dr Pepper Inc's weighted average intrinsic value is $35.49, which is approximately 7.5% above the current market price of $33.02.
Key investment considerations:
Given these factors, we believe Keurig Dr Pepper Inc is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.