Value
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.1 |
| P/S | 8.5 |
| EV/EBITDA | 1.0 |
| Fwd P/E | 8.6 |
| PEG | 6.5 |
| Analyst target | 4.0 |
- ▸Forward P/E: 13.2x
- ▸PEG: 1.11
KDP · Why this verdict
Why Keurig Dr Pepper (KDP) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.0/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Free cash flow is negative — flagged as an earnings quality red flag — meaning reported net income is not converting into cash, which calls into question the sustainability of the dividend and capital return program. Quality breakdown | If cash conversion improves, free cash flow should turn positive for 2 consecutive reported quarters, with the FCF-to-net-income ratio exceeding 50%. | →Stable |
| CounterA strong Piotroski financial health score of 7 out of 9 indicates the business retains solid balance-sheet characteristics; the FCF shortfall may reflect a transitory working-capital or investment cycle rather than a permanent earnings-quality impairment. | ||
The dividend payout ratio stands at 289%, far in excess of earnings, suggesting the current yield may not be sustainably funded by operating earnings alone and could come under pressure if cash flow does not improve. Catalyst breakdown | If the dividend is more sustainable than the payout ratio implies, the company should demonstrate free cash flow coverage of the dividend for 2 consecutive quarters. | →Stable |
| CounterConsumer-defensive companies with established brands can sustain elevated payout ratios through periods of earnings adjustment; if the FCF shortfall is transitory, the dividend could remain intact without a cut. | ||
Price momentum has carried the stock to an overbought RSI reading of 76 while the 200-day moving average slope has turned flat-to-negative — a combination that historically signals late-cycle distribution risk rather than a sustainable advance. Momentum breakdown | If the momentum proves durable, RSI should normalize below 70 without a material price pullback and the 200-day moving average slope should turn positive within two months. | →Stable |
| CounterRising on-balance volume shows genuine accumulation underlying the RSI extreme; a defensive consumer-staple business can sustain elevated RSI readings during sector rotations when investors prioritize stability over growth. | ||
The stock is trading above the analyst price target with a negative risk/reward ratio, meaning current holders face more downside than potential upside from here — the setup does not favor adding or initiating exposure at these levels. Price targets | If the fundamental case improves enough to support a higher target, analyst consensus should raise the price target at least 10% above current levels within 12 months. | →Stable |
| CounterThe elevated put/call ratio of 3.26 reflects hedging activity that could unwind favorably; if earnings continue to beat modestly as in the two most recent quarters, analysts may revise targets higher and restore a more favorable risk/reward. | ||
Free cash flow is negative — flagged as an earnings quality red flag — meaning reported net income is not converting into cash, which calls into question the sustainability of the dividend and capital return program.
→StableQuality breakdown
- Expectation
- If cash conversion improves, free cash flow should turn positive for 2 consecutive reported quarters, with the FCF-to-net-income ratio exceeding 50%.
CounterA strong Piotroski financial health score of 7 out of 9 indicates the business retains solid balance-sheet characteristics; the FCF shortfall may reflect a transitory working-capital or investment cycle rather than a permanent earnings-quality impairment.
The dividend payout ratio stands at 289%, far in excess of earnings, suggesting the current yield may not be sustainably funded by operating earnings alone and could come under pressure if cash flow does not improve.
→StableCatalyst breakdown
- Expectation
- If the dividend is more sustainable than the payout ratio implies, the company should demonstrate free cash flow coverage of the dividend for 2 consecutive quarters.
CounterConsumer-defensive companies with established brands can sustain elevated payout ratios through periods of earnings adjustment; if the FCF shortfall is transitory, the dividend could remain intact without a cut.
Price momentum has carried the stock to an overbought RSI reading of 76 while the 200-day moving average slope has turned flat-to-negative — a combination that historically signals late-cycle distribution risk rather than a sustainable advance.
→StableMomentum breakdown
- Expectation
- If the momentum proves durable, RSI should normalize below 70 without a material price pullback and the 200-day moving average slope should turn positive within two months.
CounterRising on-balance volume shows genuine accumulation underlying the RSI extreme; a defensive consumer-staple business can sustain elevated RSI readings during sector rotations when investors prioritize stability over growth.
The stock is trading above the analyst price target with a negative risk/reward ratio, meaning current holders face more downside than potential upside from here — the setup does not favor adding or initiating exposure at these levels.
→StablePrice targets
- Expectation
- If the fundamental case improves enough to support a higher target, analyst consensus should raise the price target at least 10% above current levels within 12 months.
CounterThe elevated put/call ratio of 3.26 reflects hedging activity that could unwind favorably; if earnings continue to beat modestly as in the two most recent quarters, analysts may revise targets higher and restore a more favorable risk/reward.
TrendMatrix Research · core thesis
Engine thesis — one sentence
The stock is trading above its analyst price target against a backdrop of negative free cash flow, an overbought technical reading carrying late-cycle distribution risk, a dividend payout ratio of 289% that appears uncovered, and a weak growth profile — the setup favors patience over new exposure.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.1 |
| ROA | 2.4 |
| Gross margin | 6.8 |
| Op margin | 7.6 |
| Net margin | 5.4 |
| Current ratio | 7.9 |
| FCF quality | 0.0 |
| Moat | 5.8 |
| Piotroski F | 7.8 |
- ▸Earnings quality RED FLAG: -892% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
2.4/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.8 |
| EPS growth | 0.0 |
Momentum
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 7.0 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 5.9 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.4 |
| Price target | 6.1 |
| erm sentiment | 6.1 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
3.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.3 |
| quality rank | 3.5 |
| growth rank | 6.2 |
Technical
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.8 |
| support resistance | 4.9 |
| 52w position | 8.3 |
Risk (lower is worse)
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.3 |
| days to cover | 5.0 |
| volatility | 4.8 |
| put call | 10.0 |
| implied vol | 3.1 |
| max pain risk | 3.0 |
| beta | 10.0 |
| debt equity | 5.8 |
- ▸High IV: 61%
- ▸Above max pain $15
Catalyst
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 3.5 |
| dividend safety | 6.0 |
- ▸Dividend: 276.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:5.7>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:32d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.5=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.52
Upside
-3.5%
Downside
6.7%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 52, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.0 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Sentiment at 6.6) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.5=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.52 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 6.6, Catalyst at 6.2, and Risk (lower is worse) at 6.1; the weakest are Growth at 2.4, Peer rank at 3.5, and Insider at 5.0. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -0.52 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Overbought Late Cycle Distribution
Trip ifRSI falls below 50 while price declines more than 7% from current levels within 60 days.
- P2Negative Free Cash Flow Quality Flag
Trip ifFree cash flow rises above $0 for 2 consecutive reported quarters.
- P3Dividend Payout Appears Uncovered
Trip ifDividend payout ratio falls below 100% for 2 consecutive reported periods.
- P4Stock Above Target Unfavorable Setup
Trip ifAnalyst consensus price target rises more than 10% above current price levels, restoring positive implied upside.