Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Keurig Dr Pepper Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 58.0% to 7.0% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 39, DPO 210, DIO 68). At a 6.1% WACC with mid-year discounting, the terminal value (77% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 12.8x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $67.17 per share, suggesting KDP is undervalued by 155.1% at the current price of $26.33.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 4,571 | 5,201 | 5,351 | 5,724 | 6,122 | 6,275 |
| (−) Net Interest | 1,075 | 1,224 | 1,259 | 1,347 | 1,440 | 1,476 |
| (+) D&A | 473 | 551 | 668 | 770 | 869 | 891 |
| EBITDA | 6,119 | 6,975 | 7,278 | 7,840 | 8,432 | 8,643 |
| (−) Tax | 988 | 1,124 | 1,157 | 1,237 | 1,324 | — |
| (−) CapEx | 846 | 963 | 991 | 1,060 | 1,134 | — |
| (−) ΔWC | -2,308 | -262 | -62 | -155 | -166 | — |
| Free Cash Flow (FCF) | 6,592 | 5,150 | 5,193 | 5,698 | 6,140 | — |
| Peers' EBITDA Multiple | 12.8x | |||||
| Terminal Value | 110,193 | |||||
| WACC / Discount Rate | 6.14% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 6,399 | 4,710 | 4,473 | 4,624 | 4,695 | 81,782 |
| Enterprise Value | 106,684 | |||||
| Projection Period | 24,901 | 23.3% | ||||
| Terminal Value | 81,782 | 76.7% | ||||
| (−) Current Net Debt | 15,115 | |||||
| Equity Value | 91,569 | |||||
| (÷) Outstanding Shares | 1363M | |||||
| Fair Price | $67 | +155.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 8.7x | 10.7x | 12.7x | 14.7x | 16.7x |
|---|---|---|---|---|---|
| 4.1% | $53 | $64 | $74 | $84 | $95 |
| 5.1% | $51 | $61 | $70 | $80 | $90 |
| 6.1% | $48 | $58 | $67 | $77 | $86 |
| 7.1% | $46 | $55 | $64 | $73 | $82 |
| 8.1% | $44 | $52 | $61 | $70 | $78 |
Current price: $26.33. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.