Keurig Dr Pepper Inc. — Company Overview Keurig Dr Pepper Inc. is a consumer beverage company that produces and distributes single‑serve coffee systems, branded beverages and related products, and presents a generally cash‑generative, mid‑margin financial profile with moderate leverage. Profitability and Cash Generation The company shows several durable profitability and cash‑generation traits: gr
Keurig Dr Pepper Inc. is a consumer beverage company that produces and distributes single‑serve coffee systems, branded beverages and related products, and presents a generally cash‑generative, mid‑margin financial profile with moderate leverage.
The company shows several durable profitability and cash‑generation traits: gross margin remains elevated at 52.1% and operating margin at 18.5%, with a net profit margin around 12.2% (see Profit Margin Trends). Free cash flow margin is strong at 18.67%, and operating cash flow recovered to $2.22B TTM after a dip in 2023 (see Strategic Capital Allocation). Earnings performance over multi‑year windows has been notable on a percentage basis, with a 5‑year diluted EPS CAGR of roughly 30.06% and a 3‑year EPS CAGR of about 68.39% (see Revenue & EPS Growth and EPS Diluted & Revenue per Share), while net income exhibits stability by the avg/stdev measure (4.42) referenced in the quality analysis (see Earnings Quality Analysis).
There are, however, clear areas of concern. Short‑term liquidity is tight: the current ratio sits at 0.3320, below the 1.0 threshold and indicating limited near‑term working capital cushion (see Earnings Quality Analysis). Net income and cash flow diverged in 2022–2023 when operating cash flow fell to $1.33B while net income remained around the low‑to‑mid $2B range, and although convergence has occurred in 2024 this sequencing raises earnings‑quality questions (net income TTM $2.28B vs OCF TTM $2.22B; see Strategic Capital Allocation and Revenue & Net Income). Return on equity is modest at 9.1% most recently, and the trailing P/E has risen to 23.2x (see Return on Equity (ROE) and Price-to-Earnings (PE) Ratio Trend).
Key fundamental metrics to monitor going forward include the alignment of operating cash flow with net income and the level of free cash flow (see Strategic Capital Allocation and Earnings Quality Analysis), trends in gross and operating margins (see Profit Margin Trends), diluted EPS and revenue‑per‑share growth trajectories (see EPS Diluted & Revenue per Share and Revenue & EPS Growth), and short‑term liquidity represented by the current ratio and any changes in net debt or debt‑to‑equity.
The foundation of business quality and long-term value creation
Keurig Dr Pepper Inc.'s net income has shown variability over the period presented, with large swings including a loss of -$897.0M at 2020-12-31 and a peak of $1.82B at 2021-12-31. From 2023 through 2025, net income generally tracked in the mid‑hundreds of millions (for example, $693.0M at 2023-12-31, $616.0M at 2024-09-30, $662.0M at 2025-09-30) before declining to $270.0M in the most recent quarter (2026-03-31), which is the most recent net income observation in the dataset.
Revenue observations in the dataset are less frequent than net income entries. The most recent reported revenue in this series is $14.06B for the period ending 2022-12-31; earlier reported revenues include mid‑single‑digit billions and quarterly amounts around $1.5–$3.0B in prior years. The most recent net income was $270.0M (2026-03-31). The most recent observed revenue was $14.06B (2022-12-31).
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Period Information
Report Type: Annual (10-K)
Period: Jan 2022 to Dec 2022
Analyzing long-term margin stability and competitive positioning
Keurig Dr Pepper Inc.'s margins show a clear downward shift in gross and operating profitability when comparing the mid‑2010s to the most recent reported period. Gross margin fell from about 59–60% in 2014–2016 to 52.1% in the trailing 12 months ended 2022‑12‑31, and operating margin declined from 23.7% in 2016 to 18.5% in the same most recent period. Net profit margin has been comparatively stable over the span shown, moving from 11.5% in 2014 and 12.2% in 2015 to 12.2% in 2022.
The principal inflection appears between 2016 and the latest 2022 data, where gross and operating margins compressed while net margin remained near prior levels. The most recent gross margin was 52.1%, the most recent operating margin was 18.5%, and the most recent net profit margin was 12.2%.
Understanding Profit Margins
Between Jan 2022 and Dec 2022, Keurig Dr Pepper Inc converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
Keurig Dr Pepper Inc.'s trailing twelve-month series shows a notable divergence between net income and operating cash flow through 2022–2023 followed by convergence in 2024. Operating cash flow fell from $2.84B at year-end 2022 to $1.33B at year-end 2023, while net income remained around the low- to mid-$2B range in 2023. That created a period where reported net income exceeded cash generated from operations. During 2024, operating cash flow recovered steadily to $2.22B (period-end 2024-12-31) while net income rose modestly from about $2.17B earlier in the year to $2.28B (period-end 2024-09-30), narrowing the earnings-versus-cash gap.
Most recently the two TTM metrics are closely aligned, with net income slightly above operating cash flow. The most recent Net Income (TTM) was $2.28B. The most recent Operating Cash Flow (TTM) was $2.22B.
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
Keurig Dr Pepper Inc.'s trailing twelve-month Return on Equity has shown a modest upward trend over the most recent quarters, rising from 8.5% at to 8.8% at and 9.1% at . This recent three-quarter sequence is the most relevant short-term movement in the series and indicates a gradual improvement in ROE over that period.
Looking further back, ROE has experienced several notable inflection points: very high levels in 2014–2015 (30.6% and 35.0%), a decline through 2018 (2.6%) and a trough at 0.0% in 2020, followed by a rebound to 11.2% in 2021 and 2022-09-30 and a dip to 6.8% at before the recent rise. The most recent Return on Equity (ROE) was 9.1% for the period ending .
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
Keurig Dr Pepper Inc.'s operating cash flow (TTM) shows a notable inflection in the most recent years: after a peak at $2.84B in 2022 it declined to $1.33B in 2023, then recovered to $2.22B by the 2024 year end. The recent recovery to $2.22B is the dominant feature of the operating cash flow trend through the latest reported TTM.
Investing cash flow (TTM) moved from relatively modest outflows (for example -$316M in 2020) to larger negative values in 2023 and mid-2024 (-$910M on 2024-06-30), then moderated to -$699M on 2024-09-30 and to -$573.0M on 2025-12-31.
Financing cash flow (TTM) has been progressively less negative since a large outflow of -$2.76B in 2021, narrowing to -$832M in 2023, -$531M on 2024-06-30 and -$223.0M on 2024-12-31.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
Over the past year Keurig Dr Pepper Inc.’s trailing twelve-morth P/E has moved higher from 19.8x on 2023-09-30 to 23.2x on 2024-09-30, with a modest dip to 20.3x at 2024-03-31 before rising to 21.2x at 2024-06-30 and reaching the current level. The most recent quarters show a gradual re-rating versus the mid-2023 reading.
Looking further back, the series shows larger swings: a notable peak at 31.0x on 2023-03-31 and elevated readings at 29.1x on 2022-12-31, while troughs occurred around 15.8x in 2022-03-31 and 2022-06-30. The most recent Price-to-Earnings (PE) ratio was 23.2x.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.