Head-To-Head Survey: Keurig Dr Pepper (NASDAQ:KDP) and Brown Forman (NYSE:BF.A)

Brown Forman (NYSE:BF.A) and Keurig Dr Pepper (NASDAQ:KDP) are both large-cap consumer staples companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, institutional ownership, analyst recommendations, dividends, profitability, risk and earnings.

Profitability

This table compares Brown Forman and Keurig Dr Pepper’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Brown Forman	18.20%	17.63%	8.78%
Keurig Dr Pepper	10.81%	10.51%	4.64%

Dividends

Brown Forman pays an annual dividend of $0.92 per share and has a dividend yield of 3.2%. Keurig Dr Pepper pays an annual dividend of $0.92 per share and has a dividend yield of 3.0%. Brown Forman pays out 60.1% of its earnings in the form of a dividend. Keurig Dr Pepper pays out 68.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Keurig Dr Pepper has raised its dividend for 4 consecutive years. Brown Forman is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Brown Forman has a beta of 0.32, meaning that its stock price is 68% less volatile than the S&P 500. Comparatively, Keurig Dr Pepper has a beta of 0.4, meaning that its stock price is 60% less volatile than the S&P 500.

Valuation and Earnings

This table compares Brown Forman and Keurig Dr Pepper”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Brown Forman	$3.93 billion	3.41	$715.00 million	$1.53	19.08
Keurig Dr Pepper	$16.60 billion	2.55	$2.08 billion	$1.35	23.05

Keurig Dr Pepper has higher revenue and earnings than Brown Forman. Brown Forman is trading at a lower price-to-earnings ratio than Keurig Dr Pepper, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

3.8% of Brown Forman shares are owned by institutional investors. Comparatively, 94.0% of Keurig Dr Pepper shares are owned by institutional investors. 4.1% of Brown Forman shares are owned by insiders. Comparatively, 0.3% of Keurig Dr Pepper shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current recommendations for Brown Forman and Keurig Dr Pepper, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Brown Forman	0	0	0	0	0.00
Keurig Dr Pepper	0	9	8	0	2.47

Keurig Dr Pepper has a consensus price target of $33.40, indicating a potential upside of 7.33%. Given Keurig Dr Pepper’s stronger consensus rating and higher possible upside, analysts clearly believe Keurig Dr Pepper is more favorable than Brown Forman.

Summary

Keurig Dr Pepper beats Brown Forman on 9 of the 17 factors compared between the two stocks.

About Brown Forman

Brown-Forman Corporation manufactures, bottles, imports, exports, markets, and sells various alcoholic beverages. It provides spirits, wines, whiskey spirits, whiskey-based flavored liqueurs, ready-to-drink and ready-to-pour products, ready-to-drink cocktails, vodkas, tequilas, champagnes, brandy, bourbons, and liqueurs. The company offers its products primarily under the Jack Daniel's, Woodford Reserve, Canadian Mist, GlenDronach, BenRiach, Glenglassaugh, Old Forester, Early Times, Slane Irish Whiskey, Coopers' Craft, el Jimador, Herradura, New Mix, Pepe Lopez, Antiguo, Finlandia, Korbel Champagne, and Sonoma-Cutrer brands. It is also involved in the sale of used barrels, bulk whiskey, and wine; and provision of contract bottling services. The company serves retail customers and consumers through distributors or state governments; and retailers, wholesalers, and provincial governments directly. It has operations in the United States, the United Kingdom, Germany, Australia, Mexico, and internationally. Brown-Forman Corporation was founded in 1870 and is headquartered in Louisville, Kentucky.

About Keurig Dr Pepper

Keurig Dr Pepper Inc. owns, manufactures, and distributors beverages and single serve brewing systems in the United States and internationally. It operates through three segments: U.S. Refreshment Beverages, U.S. Coffee, and International. The U.S. Refreshment Beverages segment manufactures and distributes branded concentrates, syrup, and finished beverages. Its U.S. Coffee segment offers finished goods relating to K-Cup pods, single serve brewers, specialty coffee, and ready to drink coffee products through Keurig.com website. The International segment provides sales in Canada, Mexico, the Caribbean, and other international markets from the manufacture and distribution of branded concentrates, syrup, and finished beverages; and sales in Canada from the manufacture and distribution of finished goods relating to the Company's single serve brewers, KCup pods, and other coffee products. It serves retailers, third-party bottlers and distributors, retail partners, hotel chains, office coffee distributors, and end-use consumers. The company offers its products under the Dr Pepper, Canada Dry, Green Mountain Coffee Roasters, Snapple, Mott's, The Original Donut Shop, Clamato, and Core Hydration brand name. Keurig Dr Pepper Inc. was founded in 1981 and is headquartered in Burlington, Massachusetts.