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Keurig Dr Pepper Inc. (KDP)
Intrinsic Value (DCF)
Current$27.70
→
Intrinsic$9.72
-65%
$2.79$9.72$22.91
Market implies 23% growth for 5 years
Current price reflects execution expectations above 8% growth — not unreasonable for quality businesses.
At $28, the market prices in continued strong cash flow growth (23%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $3 → Bull $23. Current price implies expectations above the base case, closer to bull expectations.
| Discount ↓Growth → | 4% | 6% | 8% | 10% |
|---|---|---|---|---|
| 8% | $14 | $16 | $19 | $21 |
| 10% | $6 | $8 | $10 | $12 |
| 12% | $2 | $3 | $5 | $6 |
| 14% | $0 | $1 | $2 | $3 |
Bull Case
- Bull case ($23) with 10% growth, 9% discount rate
- Conservative 8% growth assumption is achievable based on track record
Bear Case
- Bear case ($3) implies 90% downside at 6% growth, 12% discount
- Price reflects 23% growth expectations vs 8% historical — high bar to clear
- Trading 65% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection
Year 1$1.79B
Year 2$1.93B
Year 3$2.09B
Year 4$2.25B
Year 5$2.43B
Terminal$35.80B
📐 Model Inputs
Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$1.66BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.