Keurig Dr Pepper Is A Solid Business Operating In A Tough Environment

Summary

• Keurig Dr Pepper has a strong soda and coffee business, with a robust market position in both industries.
• I believe the business has a narrow economic moat built upon the high-quality reputations of their soda brands and the Keurig coffee system.
• Second quarter results were solid, with low single-digit revenue growth and a double-digit expansion in operating margin. Q3 results should hopefully be similar.
• My DCF calculation suggests shares are trading at a slight 8% overvaluation.
• Hold rating issued.

asiantiger247

Investment Thesis

Keurig Dr Pepper (NASDAQ:KDP) produces some of the most popular soft drinks such as Snapple, Canada Dry and of course, Dr Pepper. The company also manufactures the Keurig line of home-brew coffee machines and pods.

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