KDP
Keurig Dr Pepper Inc.
$31.25
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Undervalued
Trading 46.8% below fair value
You pay
$31.25
Bear
$50.35
Fair
$58.76
Bull
$67.15
Bear
$50.35
+61.1%
$2.88 × 20x P/E
Fair
$58.76
+88.0%
$2.88 × 23x P/E
Bull
$67.15
+114.9%
$2.88 × 27x P/E
Key Value Driver
Normalized P/E multiple (23x base case)
Implied Market Multiple
10.9x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $33.60 from 28 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $58.76 per share.
Warnings
The company's reported profits differ from official accounting profits by 88%. Check what costs are being left out of the adjusted number.
Dividend-based valuation: $24.66 (below our primary estimate by 63%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $33.60 (from 28 analysts). Our estimate is 100% above the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples