PEP  Pepsico Inc.

Exchange

NYSE

Sector

Consumer Non-Durables

Industry

Beverages (Production/Distribution)

Market Cap.

159.44B

Vuru Grade

62.01/100

Current Price

$111.85
-0.95 (-0.84%)

Growth Price

$53.49
Overvalued by 52.17%

Stability Price

$23.05
Overvalued by 79.39%

Company Metrics

  • P/E 23.69
  • P/S 2.54
  • P/B 12.81
  • EPS 4.72
  • Cash ROIC 16.42%
  • Cash Ratio 0.76
  • Dividend 3.22 / 2.85%
  • Avg. Vol. 3.24M
  • Shares 1.43B
  • Market Cap. 159.44B

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

Best Buy: The Coca-Cola Co vs. PepsiCo, Inc. vs. Procter & Gamble Co
Motley Fool - 10 hours ago
Coca-Cola (NYSE:KO), Procter & Gamble (NYSE:PG) , and PepsiCo (NYSE:PEP) have been offering investors dividend increases for a combined 162 consecutive years.
Heritage Investors Management Corp Lowers Position in Pepsico, Inc. (PEP) - Dispatch Tribunal
Marching to the Beat of Their Own Drum, Update on Pepsico, Inc - HiTechFacts
Better Buy: The Coca-Cola Co vs. PepsiCo, Inc.
Motley Fool - Sep 13, 2017
Pepsi, on the other hand, has other drinks on its roster -- Gatorade, Aquafina, Mountain Dew, and Tropicana, to name a few -- as well as snacks like Quaker Oats, Doritos, and Fritos.
Better Buy: Procter & Gamble Co vs. PepsiCo, Inc.
Motley Fool - Aug 26, 2017
If you're nearing or in retirement, dividend-paying stocks like Procter & Gamble (NYSE:PG) and Pepsi (NYSE:PEP) are likely high on your list of stocks to own.
PepsiCo Longs Should Take Note
Seeking Alpha - Sep 19, 2017
I've been cautious on PepsiCo (PEP) for some time as I've thought the company's valuation against its growth prospects was out of line.
Analyzing the Insider Data for Pepsico, Inc. (PEP) - NY Stock News
The Case for and Against Pepsico, Inc. (PEP) - StockNewsJournal
Pepsi: When Will the Growth Happen?
Seeking Alpha - Sep 19, 2017
Pepsi (PEP) doesn't need a presentation to any serious investor. It is a Dividend Aristocrat and will soon hit 50 consecutive years with a dividend increase.
Bets being placed on PepsiCo
Seeking Alpha - Sep 15, 2017
PepsiCo (PEP +0.3%) is on watch after Macquarie launches coverage on the beverage stock to Outperform and sets a price target of $125.
Pepsico, Inc. (NYSE:PEP) Lowered to Hold at Zacks Investment Research - The Ledger Gazette
Traders Take Note: Pepsico Inc (NYSE:PEP) Stock Drops, Weakness in Technical ... - CML News
Pepsico, Inc. (PEP) Ex-Dividend Date Scheduled for August 30, 2017
Nasdaq - Aug 29, 2017
Pepsico, Inc. ( PEP ) will begin trading ex-dividend on August 30, 2017. A cash dividend payment of $0.805 per share is scheduled to be paid on September 29, 2017.
Pepsi Has The Wind At Its Back
Seeking Alpha - Sep 13, 2017
PepsiCo (PEP) has been the epitome of slow and steady growth for many years. The company's diversified mix of food and beverage has served it much better than Coca-Cola (NYSE:KO), for instance, and the stock's performance combined with its attractive ...
PepsiCo Announces Timing and Availability of Third Quarter 2017 Financial ...
PR Newswire (press release) - Sep 6, 2017
PURCHASE, N.Y., Sept. 6, 2017 /PRNewswire/ -- PepsiCo, Inc. (NYSE: PEP) today announced that it will issue its third quarter 2017 (ending September 9) financial results on Wednesday, October 4, 2017 at approximately 6:00 a.m.
Today Analysts Focus on Pepsico, Inc. (PEP), Under Armour, Inc. (UA) - StockNewsJournal
Pepsico, Inc. (PEP) Earns “Hold” Rating from BMO Capital Markets - Dispatch Tribunal
Buy or Sell? Average Brokerage Ratings on Pepsico, Inc. (PEP), Blue Buffalo ...
StockNewsJournal - Sep 22, 2017
Investors who are keeping close eye on the stock of Pepsico, Inc. (NYSE:PEP) established that the company was able to keep return on investment at - in the trailing twelve month while Reuters data showed that industry's average stands at 5.26 and ...
Keep Eye on High Institutional Ownership Stocks: Pepsico, Inc. (NYSE:PEP), The ... - Wallstreet Investorplace
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.

$111.85 Current Price

$53.49 Growth Price (DCF)

Overvalued by 52.17%


Growth Rate Assumed by Market: 27.74%


Future Free Cash Flow Growth Rate: 7.9%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$23.05 Stability Price (EPV)

Overvalued by 79.39%


Discount Rate: 15.0%

$54.55 Book Price

Overvalued by 51.23%


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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