PEP  Pepsico Inc.

Exchange

NYSE

Sector

Consumer Non-Durables

Industry

Beverages (Production/Distribution)

Market Cap.

168.43B

Vuru Grade

62.01/100

Current Price

$117.91
+0.38 (+0.32%)

Growth Price

$53.38
Overvalued by 54.73%

Stability Price

$23.00
Overvalued by 80.49%

Company Metrics

  • P/E 25.41
  • P/S 2.67
  • P/B 14.34
  • EPS 4.64
  • Cash ROIC 16.42%
  • Cash Ratio 0.76
  • Dividend 3.22 / 2.73 %
  • Avg. Vol. 3.65M
  • Shares 1.43B
  • Market Cap. 168.43B

Company Description

PepsiCo, Inc. manufactures, markets, and sells various foods, snacks, and carbonated and non-carbonated beverages worldwide. The company operates in four divisions: PepsiCo Americas Foods (PAF), PepsiCo Americas Beverages (PAB), PepsiCo Europe, and PepsiCo Asia, Middle East and Africa (AMEA). PAF division's Frito-Lay North America business primarily offers LAY'S and RUFFLES potato chips, DORITOS t... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

PepsiCo in bid to acquire Vita Coco owner: Sources
CNBC - May 26, 2017
Soft drink maker PepsiCo Inc is in talks to acquire All Market Inc, the owner of coconut water brand Vita Coco, whose celebrity investors include Madonna and Matthew McConaughey, people familiar with the matter said on Friday.
Better Buy: PepsiCo, Inc. vs. Kimberly-Clark Corp
Motley Fool - May 24, 2017
Pepsi is parent company to more than just the eponymous soda. It's portfolio includes 22 billion-dollar brands, including Gatorade, Cheetos, Aquafina, Lipton teas, and Quaker Foods.
Is PepsiCo (PEP) Mulling Over Buyout of Vita Coco Owner?
Zacks.com - May 29, 2017
In 2016, PepsiCo acquired a sparkling probiotic U.S. drinks company, KeVita, thereby diversifying its soft drinks portfolio amid slowing soda sales.
BRIEF-Tibet Water Resources says Wang Dong has been appointed as executive ... - Reuters
PepsiCo Stock History: Will the Snack and Beverage Giant Pop or Fizzle Out?
Motley Fool - May 23, 2017
Pepsi-Cola's history dates back to the 19th century, but PepsiCo, Inc. was created from the merger of Pepsi-Cola and the Frito-Lay snack business back in 1965.
PepsiCo to sell some of all its 4.5% Britvic stake
MarketWatch - May 25, 2017
LONDON--PepsiCo Inc. PEP, +0.32% plans to sell some or all of its 4.5% stake in Britvic PLC (BVIC.LN), the drinks company that produces and sells Pepsi in the U.K.. PepsiCo on Thursday said it will sell up to 11.8 million shares in Britvic, its entire ...
PepsiCo Plans To Sell All Of Its 4.5% Stake In Britvic - Nasdaq
PepsiCo To Sell Up To All Of 4.5% Stake In Bottling Partner Britvic (ALLISS) - London South East (registration) (blog)
PepsiCo: Better Than Coca-Cola At Everything (Almost)
Seeking Alpha - May 5, 2017
PepsiCo maintains a more diverse revenue stream compared with Coca-Cola, having branded foods operating segments. PepsiCo is generating much higher excess returns and achieving better earnings growth. Coca-Cola maintains a higher current ...
PepsiCo Advances 2025 Sustainability Agenda through Agreement with Partnership ...
PR Newswire (press release) - May 11, 2017
PURCHASE, N.Y., May 11, 2017 /PRNewswire/ -- PepsiCo, Inc. (NYSE: PEP) today announced that it has signed an agreement with Partnership for a Healthier America ("PHA") to independently report and verify the company's progress against previously ...
PepsiCo: Does The Dividend Trump Weak Results?
Seeking Alpha - May 2, 2017
PepsiCo (NYSE:PEP) has been an unstoppable force in the food/beverage sectors for many years. I've preferred PEP to Coca-Cola (NYSE:KO) due to the former's diversification with its enormous food business, deleveraging it from sinking soda sales.
PepsiCo - Mature And Overvalued Company
Seeking Alpha - May 16, 2017
PepsiCo is a mature company, with limited to no growth in revenues potential, low reinvestment rate, and industry-level profit margins;.
PepsiCo: The Soda Tax Is The Opportunity
Seeking Alpha - May 14, 2017
For the non-alcoholic beverage businesses that sell sweetened drinks, the soda tax is an environmental threat to growth that is not going away.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for PEP to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate PEP's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$117.91 Current Price

$53.38 Growth Price (DCF)

Overvalued by 54.73%


Growth Rate Assumed by Market: 29.13%


Future Free Cash Flow Growth Rate: 7.9%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$23.00 Stability Price (EPV)

Overvalued by 80.49%


Discount Rate: 15.0%

$54.55 Book Price

Overvalued by 53.73%


Excellent Cash Return on Invested Capital over the past 5 years

PEP has efficiently invested its financial resources in buildings, projects, and equipment, resulting in strong returns. Annual Reports can be useful in identifying the cause of one-time events and future sustainability.

PEP has created $16.42 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20122013201420152016
Free Cash Flow 5.77B 6.89B 7.65B 7.82B 7.36B
divided by
Invested Capital 50.93B 49.96B 43.69B 40.08B 36.87B
Cash ROIC 11.32% 13.80% 17.50% 19.52% 19.97%

Excellent Return on Equity over the past 5 years

Over the past 5 years, PEP has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

PEP has generated $39.20 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20122013201420152016
Net Income 6.21B 6.79B 6.56B 5.50B 6.38B
divided by
Stockholders' Equity 22.42B 24.41B 17.44B 11.92B 11.25B
Return on Equity 27.72% 27.81% 37.61% 46.14% 56.72%

Excellent Business Performance over the past 10 years

PEP has been able to maintain profitability in good times and bad. This could mean PEP has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

PEP has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow 4.50B 4.55B 4.67B 5.20B 5.61B 5.77B 6.89B 7.65B 7.82B 7.36B

Weak Balance Sheet

PEP's financial position is not ideal. The key is to check whether PEP is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash 2.48B 2.28B 4.14B 6.37B 4.43B 6.62B 9.68B 8.73B 12.01B 16.13B
Current Assets 10.15B 10.81B 12.57B 17.57B 17.44B 18.72B 22.20B 20.66B 23.03B 27.09B
Total Assets 34.63B 35.99B 39.85B 68.15B 72.88B 74.64B 77.48B 70.51B 69.67B 74.13B
Current Liabilities 7.75B 8.79B 8.76B 15.89B 18.15B 17.09B 17.84B 18.09B 17.58B 21.14B
Total Liabilities 17.30B 23.89B 23.04B 46.88B 52.14B 52.22B 53.07B 53.07B 57.74B 62.88B
Stockholder' Equity 17.33B 12.11B 16.80B 21.27B 20.75B 22.42B 24.41B 17.44B 11.92B 11.25B
Current Ratio 1.31 1.23 1.44 1.11 0.96 1.10 1.24 1.14 1.31 1.28
TL-to-TA 0.50 0.66 0.58 0.69 0.72 0.70 0.68 0.75 0.83 0.85

Consistent Reinvestment of Profits over the past 10 years

PEP has consistently retained profits. This may put PEP in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, PEP can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings 28.18B 30.64B 33.81B 37.09B 40.32B 43.16B 46.42B 49.09B 50.47B 52.52B
Retained Earnings Growth - 8.71% 10.34% 9.72% 8.70% 7.05% 7.56% 5.76% 2.81% 4.05%

Potential Competitive Advantage over the past 10 years

PEP potentially has a competitive advantage. This could be strong branding, the ability to keep costs low, or some other characteristic that is hard to replicate. Look at its future prospects to determine sustainability and whether the economic moat will strengthen.

$10.90 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 5.66B 5.14B 5.95B 6.32B 6.44B 6.21B 6.79B 6.56B 5.50B 6.38B
divided by
Revenue 39.47B 43.25B 43.23B 57.84B 66.50B 65.49B 66.42B 66.68B 63.06B 62.80B
Net Profit Margin 14.33% 11.89% 13.75% 10.93% 9.69% 9.49% 10.22% 9.83% 8.72% 10.16%

Strong Pricing Power over the past 10 years

PEP has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$58.37 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit 21.44B 22.90B 23.13B 31.26B 66.50B 34.20B 35.17B 35.80B 34.67B 34.59B
divided by
Revenue 39.47B 43.25B 43.23B 57.84B 66.50B 65.49B 66.42B 66.68B 63.06B 62.80B
Gross Margin 54.30% 52.95% 53.51% 54.05% 100.00% 52.22% 52.96% 53.69% 54.99% 55.08%

Medium Capital Intensity over the past 10 years

PEP has used a reasonable amount of their financial resources to invest in facilities and equipment required to produce its goods and services. This isn't perfect, but it shouldn't be an area of concern unless this number is strongly trending upwards.

45.58% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure 2.43B 2.45B 2.13B 3.25B 3.34B 2.71B 2.80B 2.86B 2.76B 3.04B
divided by
Net Income 5.66B 5.14B 5.95B 6.32B 6.44B 6.21B 6.79B 6.56B 5.50B 6.38B
Capital Expenditure Ratio 42.95% 47.57% 35.79% 51.47% 51.82% 43.68% 41.18% 43.60% 50.14% 47.66%

Very Strong Dividend History over the past 10 years

PEP has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests PEP is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid 2.20B 2.54B 2.73B 2.98B 3.16B 3.31B 3.43B 3.73B 4.04B 4.23B
divided by
Shares Outstanding 1.66B 1.60B 1.58B 1.61B 1.60B 1.58B 1.56B 1.53B 1.49B 1.45B
Dividend Paid Per Share 1.33 1.59 1.73 1.85 1.98 2.10 2.20 2.44 2.72 2.91
Price at Year End 68.42 50.02 57.70 63.13 66.35 68.02 82.91 95.96 101.15 104.63
Dividend Yield 1.95% 3.17% 3.00% 2.92% 2.98% 3.08% 2.66% 2.55% 2.69% 2.78%

Strong History of Stock Buybacks over the past 10 years

PEP has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 1.66B 1.60B 1.58B 1.61B 1.60B 1.58B 1.56B 1.53B 1.49B 1.45B
Stock Bought Back - 3.35% 1.59% -2.29% 1.06% 1.40% 0.96% 2.16% 2.83% 2.27%
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