Keurig Dr Pepper (NASDAQ:KDP) versus Luckin Coffee (OTCMKTS:LKNCY) Financial Review

Luckin Coffee (OTCMKTS:LKNCY) and Keurig Dr Pepper (NASDAQ:KDP) are both large-cap consumer staples companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, valuation, analyst recommendations, dividends, risk, institutional ownership and earnings.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Luckin Coffee	9.59%	36.80%	18.33%
Keurig Dr Pepper	9.78%	11.19%	5.13%

Institutional and Insider Ownership

0.5% of Luckin Coffee shares are held by institutional investors. Comparatively, 94.0% of Keurig Dr Pepper shares are held by institutional investors. 2.7% of Luckin Coffee shares are held by company insiders. Comparatively, 0.4% of Keurig Dr Pepper shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Luckin Coffee and Keurig Dr Pepper, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Luckin Coffee	0	1	1	0	2.50
Keurig Dr Pepper	2	7	10	0	2.42

Luckin Coffee currently has a consensus target price of $52.00, indicating a potential upside of 42.86%. Keurig Dr Pepper has a consensus target price of $35.27, indicating a potential upside of 26.38%. Given Luckin Coffee’s stronger consensus rating and higher possible upside, research analysts plainly believe Luckin Coffee is more favorable than Keurig Dr Pepper.

Volatility & Risk

Luckin Coffee has a beta of -0.29, indicating that its share price is 129% less volatile than the S&P 500. Comparatively, Keurig Dr Pepper has a beta of 0.43, indicating that its share price is 57% less volatile than the S&P 500.

Valuation and Earnings

This table compares Luckin Coffee and Keurig Dr Pepper”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Luckin Coffee	$4.72 billion	2.19	$401.71 million	$1.76	20.68
Keurig Dr Pepper	$16.17 billion	2.34	$1.44 billion	$1.16	24.06

Keurig Dr Pepper has higher revenue and earnings than Luckin Coffee. Luckin Coffee 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.

Summary

Keurig Dr Pepper beats Luckin Coffee on 8 of the 14 factors compared between the two stocks.

About Luckin Coffee

Luckin Coffee Inc. offers retail services of freshly brewed drinks, and pre-made food and beverage items in the People's Republic of China. It offers hot and iced freshly brewed coffee, such as Americano, Latte, Cappuccino, Macchiato, Flat White, and Mocha, as well as specialty coffee based on market and seasonal trends; coconut milk latte products; tea drinks; pre-made beverages; and pre-made food items, such as pastries, sandwiches, and snacks. In addition, the company offers Luckin Pop premium instant coffee and inspirational cups through mobile apps and e-commerce platforms. It operates pick-up stores, relax stores, and delivery kitchens under the Luckin brand, as well as Luckin mobile app, Weixin mini-program, and other third-party platforms for third-party payment channels. Further, the company offers technical and consultation services; and manufactures materials for products. Luckin Coffee Inc. was incorporated in 2017 and is headquartered in Xiamen, the People's Republic of China.

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.