StockStory Flags Debt and Returns Concerns at Keurig Dr Pepper
The publisher points to high debt, a 5.7% five-year average return on invested capital and a free-cash-flow margin that did not improve.
Key takeaways
- StockStory reported $29.98 billion in debt and $1.55 billion in cash.
- The publisher cited a five-year average return on invested capital of 5.7%.
- Keurig Dr Pepper’s trailing-12-month free-cash-flow margin was 9.9%, unchanged over the prior year, according to StockStory.
StockStory questioned Keurig Dr Pepper’s investment appeal, citing $29.98 billion in debt compared with $1.55 billion in cash. The publisher also pointed to the company’s five-year average return on invested capital of 5.7%.
According to StockStory, the company’s free-cash-flow margin was 9.9% over the trailing 12 months and had not improved over the previous year. The publisher argued that the flat margin and the company’s record on growth investments weakened its quality profile.
StockStory calculated net debt at five times trailing-12-month EBITDA of $5.41 billion. It said further borrowing could become more expensive and that credit agencies could downgrade the company if profitability fell.
At the time of the article, Keurig Dr Pepper shares traded at $30.91, or 12.7 times forward earnings. StockStory described that valuation as fair. It reported a 21.3% share gain over six months, compared with a 17.5% return for the S&P 500.
The publisher said Keurig Dr Pepper did not meet its quality test and pointed readers toward an unnamed software business it called dominant.
This article was produced with the help of AI technology. Source: Yahoo Finance
