Stock Analysis on Net

Keurig Dr Pepper Inc. (NASDAQ:KDP)

This company has been moved to the archive! The financial data has not been updated since July 28, 2022.

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.


Economic Profit

Keurig Dr Pepper Inc., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Net operating profit after taxes (NOPAT)1 2,588 1,786 1,753 903
Cost of capital2 8.77% 8.40% 8.28% 8.14%
Invested capital3 44,109 43,835 44,138 44,635
 
Economic profit4 (1,280) (1,897) (1,904) (2,729)

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 2,5888.77% × 44,109 = -1,280

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Keurig Dr Pepper Inc. economic profit increased from 2019 to 2020 and from 2020 to 2021.

Net Operating Profit after Taxes (NOPAT)

Keurig Dr Pepper Inc., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Net income attributable to KDP 2,146 1,325 1,254 586
Deferred income tax expense (benefit)1 31 (51) (23) (81)
Increase (decrease) in allowance for expected credit losses2 (14) 12 1 6
Increase (decrease) in product warranties3 3 2 (5)
Increase (decrease) in restructuring liabilities4 5 (1) (14) 25
Increase (decrease) in equity equivalents5 25 (38) (36) (55)
Interest expense 500 604 654 452
Interest expense, operating lease liability6 29 28 23 15
Adjusted interest expense 529 632 677 467
Tax benefit of interest expense7 (111) (133) (142) (98)
Adjusted interest expense, after taxes8 418 499 535 369
Net income (loss) attributable to noncontrolling interest (1) 3
Net operating profit after taxes (NOPAT) 2,588 1,786 1,753 903

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for expected credit losses.

3 Addition of increase (decrease) in product warranties.

4 Addition of increase (decrease) in restructuring liabilities.

5 Addition of increase (decrease) in equity equivalents to net income attributable to KDP.

6 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 684 × 4.30% = 29

7 2021 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 529 × 21.00% = 111

8 Addition of after taxes interest expense to net income attributable to KDP.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Keurig Dr Pepper Inc. NOPAT increased from 2019 to 2020 and from 2020 to 2021.

Cash Operating Taxes

Keurig Dr Pepper Inc., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Provision for income taxes 653 428 440 202
Less: Deferred income tax expense (benefit) 31 (51) (23) (81)
Add: Tax savings from interest expense 111 133 142 98
Cash operating taxes 733 612 605 381

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Keurig Dr Pepper Inc. cash operating taxes increased from 2019 to 2020 and from 2020 to 2021.

Invested Capital

Keurig Dr Pepper Inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Short-term borrowings and current portion of long-term obligations 304 2,345 1,593 1,458
Current finance lease liability 79 44 41 26
Long-term obligations, excluding current portion 11,578 11,143 12,827 14,201
Non-current finance lease liability 621 298 269 305
Operating lease liability1 684 652 496 246
Total reported debt & leases 13,266 14,482 15,226 16,236
Stockholders’ equity 24,972 23,829 23,257 22,533
Net deferred tax (assets) liabilities2 5,944 5,948 6,001 5,897
Allowance for expected credit losses3 7 21 9 8
Product warranties4 13 10 8 8
Restructuring liabilities5 19 14 15 29
Equity equivalents6 5,983 5,993 6,033 5,942
Accumulated other comprehensive (income) loss, net of tax7 26 (77) (104) 130
Non-controlling interest 1
Adjusted stockholders’ equity 30,981 29,746 29,186 28,605
Construction-in-progress8 (138) (393) (274) (206)
Invested capital 44,109 43,835 44,138 44,635

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of product warranties.

5 Addition of restructuring liabilities.

6 Addition of equity equivalents to stockholders’ equity.

7 Removal of accumulated other comprehensive income.

8 Subtraction of construction-in-progress.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Keurig Dr Pepper Inc. invested capital decreased from 2019 to 2020 but then increased from 2020 to 2021 not reaching 2019 level.

Cost of Capital

Keurig Dr Pepper Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 51,976 51,976 ÷ 66,587 = 0.78 0.78 × 10.41% = 8.13%
Short-term borrowings, long-term obligations (including current portion), and finance lease liability3 13,927 13,927 ÷ 66,587 = 0.21 0.21 × 3.67% × (1 – 21.00%) = 0.61%
Operating lease liability4 684 684 ÷ 66,587 = 0.01 0.01 × 4.30% × (1 – 21.00%) = 0.03%
Total: 66,587 1.00 8.77%

Based on: 10-K (reporting date: 2021-12-31).

1 US$ in millions

2 Equity. See details »

3 Short-term borrowings, long-term obligations (including current portion), and finance lease liability. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 43,428 43,428 ÷ 60,119 = 0.72 0.72 × 10.41% = 7.52%
Short-term borrowings, long-term obligations (including current portion), and finance lease liability3 16,039 16,039 ÷ 60,119 = 0.27 0.27 × 4.00% × (1 – 21.00%) = 0.84%
Operating lease liability4 652 652 ÷ 60,119 = 0.01 0.01 × 4.30% × (1 – 21.00%) = 0.04%
Total: 60,119 1.00 8.40%

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in millions

2 Equity. See details »

3 Short-term borrowings, long-term obligations (including current portion), and finance lease liability. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 39,733 39,733 ÷ 56,055 = 0.71 0.71 × 10.41% = 7.38%
Short-term borrowings, long-term obligations (including current portion), and finance lease liability3 15,826 15,826 ÷ 56,055 = 0.28 0.28 × 3.90% × (1 – 21.00%) = 0.87%
Operating lease liability4 496 496 ÷ 56,055 = 0.01 0.01 × 4.60% × (1 – 21.00%) = 0.03%
Total: 56,055 1.00 8.28%

Based on: 10-K (reporting date: 2019-12-31).

1 US$ in millions

2 Equity. See details »

3 Short-term borrowings, long-term obligations (including current portion), and finance lease liability. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 35,363 35,363 ÷ 51,421 = 0.69 0.69 × 10.41% = 7.16%
Short-term borrowings, long-term obligations (including current portion), and finance lease liability3 15,812 15,812 ÷ 51,421 = 0.31 0.31 × 3.92% × (1 – 21.00%) = 0.95%
Operating lease liability4 246 246 ÷ 51,421 = 0.00 0.00 × 6.18% × (1 – 21.00%) = 0.02%
Total: 51,421 1.00 8.14%

Based on: 10-K (reporting date: 2018-12-31).

1 US$ in millions

2 Equity. See details »

3 Short-term borrowings, long-term obligations (including current portion), and finance lease liability. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Keurig Dr Pepper Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Selected Financial Data (US$ in millions)
Economic profit1 (1,280) (1,897) (1,904) (2,729)
Invested capital2 44,109 43,835 44,138 44,635
Performance Ratio
Economic spread ratio3 -2.90% -4.33% -4.31% -6.11%
Benchmarks
Economic Spread Ratio, Competitors4
Coca-Cola Co. 5.33% 3.11% 3.41%
Mondelēz International Inc. -0.60% -1.77% -2.21%
PepsiCo Inc. 5.59% 4.21% 5.99%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -1,280 ÷ 44,109 = -2.90%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Keurig Dr Pepper Inc. economic spread ratio deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.

Economic Profit Margin

Keurig Dr Pepper Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Selected Financial Data (US$ in millions)
Economic profit1 (1,280) (1,897) (1,904) (2,729)
Net sales 12,683 11,618 11,120 7,442
Performance Ratio
Economic profit margin2 -10.09% -16.33% -17.12% -36.67%
Benchmarks
Economic Profit Margin, Competitors3
Coca-Cola Co. 11.07% 7.14% 6.75%
Mondelēz International Inc. -1.29% -4.08% -5.04%
PepsiCo Inc. 4.91% 4.19% 5.30%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

1 Economic profit. See details »

2 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × -1,280 ÷ 12,683 = -10.09%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Keurig Dr Pepper Inc. economic profit margin improved from 2019 to 2020 and from 2020 to 2021.