Keurig Dr Pepper Stock Hits Key Support – Buying Opportunity?
Keurig Dr Pepper (KDP) stock should be on your watchlist. Here is why – it is currently trading in the support zone ($27.41 – $30.29), levels from which it has bounced meaningfully before. In the last 10 years, Keurig Dr Pepper stock received buying interest at this level 5 times and subsequently went on to generate 16.4% in average peak returns.
| Peak Return | Days to Peak Return | |
|---|---|---|
| 2/19/2021 | 19.1% | 103 |
| 9/28/2021 | 20.2% | 322 |
| 10/26/2023 | 13.1% | 68 |
| 3/1/2024 | 9.2% | 52 |
| 4/23/2024 | 20.4% | 153 |
But is the price action enough alone? It certainly helps if the fundamentals check out. For KDP Read Buy or Sell KDP Stock to see how convincing this buy opportunity might be.
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Here are some quick data points for Keurig Dr Pepper that should help decision:
- Revenue Growth: 6.8% LTM and 5.9% last 3 year average.
- Cash Generation: Nearly 9.9% free cash flow margin and 21.5% operating margin LTM.
- Recent Revenue Shocks: The minimum annual revenue growth in last 3 years for KDP was 3.4%.
- Valuation: KDP stock trades at a PE multiple of 24.8
- Opportunity vs S&P: Compared to S&P, you get higher valuation, higher revenue growth, and better operating margins
For quick background, Keurig Dr Pepper operates as a beverage company offering coffee systems, packaged beverages, concentrates, and Latin American products to retailers, distributors, restaurants, hotels, offices, and consumers.
| KDP | S&P Median | |
|---|---|---|
| Sector | Consumer Staples | – |
| Industry | Soft Drinks & Non-alcoholic Beverages | – |
| PE Ratio | 24.8 | 23.7 |
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| LTM* Revenue Growth | 6.8% | 5.2% |
| 3Y Average Annual Revenue Growth | 5.9% | 5.3% |
| Min Annual Revenue Growth Last 3Y | 3.4% | -0.1% |
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| LTM* Operating Margin | 21.5% | 18.8% |
| 3Y Average Operating Margin | 21.8% | 17.9% |
| LTM* Free Cash Flow Margin | 9.9% | 13.1% |
*LTM: Last Twelve Months
What Is Stock-Specific Risk If The Market Crashes?
That said, KDP isn’t immune to big sell-offs. It fell about 55% during the Global Financial Crisis, dropped 34% in the Covid pandemic, and lost roughly 28% during the inflation shock. Even the smaller 2018 correction hit it for over 13%. The stock has solid fundamentals, no doubt, but when the market turns sour, steep declines can still happen.
But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – think events like earnings, business updates, outlook changes. Read KDP Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.