Bill Nygren’s Oakmark Select Fund disclosed an increased position in Keurig Dr Pepper (NASDAQ: KDP | KDP Price Prediction) in its fourth-quarter 2025 commentary, buying the beverage giant while the stock drifted through the mid-$20s and most of Wall Street walked away. On April 23, 2026, shares jumped 7.5% after a first-quarter earnings beat, a belated nod to a thesis Nygren laid out months earlier.
What Nygren Saw in Q4 2025
When the Oakmark Select Fund added Keurig Dr Pepper, shares traded at roughly 12x forward earnings, a discount to both the stock’s own history and the broader beverage group. The setup checked every Oakmark box: a defensive consumer-staples cash flow profile, durable brands (Dr Pepper, Keurig, Snapple, GHOST, Mott’s), and a near-term value-unlock catalyst in the pending JDE Peet’s acquisition and planned separation into two pure-play companies, beverages and global coffee.
Execution risk was the reason the multiple compressed. Nygren’s view, as summarized in Oakmark’s commentary and prior 24/7 Wall St. coverage, was that those risks were already priced in. Shares had slid from $32.58 at the Q2 2025 filing to $28.33 by late October, giving patient capital a cheap entry into a business generating $16.6 billion in annual revenue.
What Has Happened Since
The company has delivered. Full-year 2025 revenue rose 8.16% to $16.60 billion, adjusted EPS of $2.05 beat the $2.04 estimate, and free cash flow reached $1.52 billion. The JDE Peet’s deal closed April 1, 2026, turning Keurig Dr Pepper into a global coffee operator across 100-plus markets.
Wednesday’s Q1 2026 print was the inflection. Revenue of $3.98 billion rose 9.4% and beat the $3.83 billion consensus, adjusted EPS of $0.39 topped the $0.37 estimate, and operating cash flow expanded 34.5% to $281 million. U.S. Refreshment Beverages grew 11.9%, and management reaffirmed guidance for $25.9 billion to $26.4 billion in 2026 net sales with low-double-digit constant-currency adjusted EPS growth. CEO Tim Cofer called it “a solid first quarter, with strong momentum in our cold beverage portfolio.”
Is It Still a Buy at Current Levels?
Even after the rally, the math that attracted Oakmark has barely budged. The stock trades at 12x forward earnings against a trailing multiple of 19, with a beta of 0.361 and EV/EBITDA of 12. The consensus price target of $32.81 exceeds the current $28.53, but the one-year chart still shows an 18.9% decline.
The risks are concrete. The JDE Peet’s financing pushed total principal debt to roughly $25.9 billion, quarterly interest expense roughly doubled year over year to $281 million, and GAAP net income fell 47.8% on deal costs. U.S. Coffee volume dropped 8.2%, and a credit-rating downgrade remains possible. Dividend sustainability through the planned spin-off is also an open question for income-focused holders.
Nygren’s thesis has been validated, and the setup that drew him in, a low-teens forward multiple on a staple business with a separation catalyst ahead, largely remains. The easy vindication trade is over. The patient, value-investor case that the two pure-play companies will be worth more apart than together is still intact, provided integration and balance-sheet discipline hold.
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