Don't Take a Position in PepsiCo Stocks Without Knowing Its Fundamentals!

PepsiCo logged a -2.4% change during today's morning session, and is now trading at a price of $158.65 per share.

PepsiCo returned losses of -8.0% last year, with its stock price reaching a high of $196.88 and a low of $155.83. Over the same period, the stock underperformed the S&P 500 index by -28.0%. As of April 2023, the company's 50-day average price was $176.5. PepsiCo, Inc. manufactures, markets, distributes, and sells various beverages and convenient foods worldwide. Based in Purchase, NY, the large-cap Consumer Staples company has 315,000 full time employees. PepsiCo has offered a 3.0% dividend yield over the last 12 months.

Overview of the Company's Finances:

2018-02-13 2019-02-15 2020-02-13 2021-02-11 2022-02-10 2023-02-09
Revenue (MM) $63,525 $64,661 $67,161 $70,372 $79,474 $86,392
Gross Margins 55.0% 55.0% 55.0% 55.0% 53.0% 53.0%
Operating Margins 16% 16% 15% 14% 14% 13%
Net Margins 8.0% 19.0% 11.0% 10.0% 10.0% 10.0%
Net Income (MM) $4,857 $12,515 $7,314 $7,120 $7,618 $8,910
Net Interest Expense (MM) -$907 -$1,219 -$935 -$1,128 -$1,863 -$939
Depreciation & Amort. (MM) -$2,369 -$2,399 -$2,432 -$2,548 -$2,710 -$2,763
Earnings Per Share $3.38 $8.78 $5.2 $5.11 $5.48 $6.42
EPS Growth n/a 159.76% -40.77% -1.73% 7.24% 17.15%
Diluted Shares (MM) 1,438 1,425 1,407 1,392 1,389 1,387
Free Cash Flow (MM) $12,819 $12,563 $9,479 $10,558 $11,450 $10,560
Capital Expenditures (MM) -$2,789 -$3,148 $170 $55 $166 $251
Net Current Assets (MM) -$37,796 -$41,153 -$46,034 -$56,365 -$54,443 -$53,375
Long Term Debt (MM) $33,796 $28,295 $29,148 $40,370 $36,026 $35,657
Net Debt / EBITDA 1.56 1.86 2.07 2.73 2.48 2.39

PepsiCo has weak revenue growth and a flat capital expenditure trend, weak operating margings with a stable trend, and irregular cash flows. In addition, we note significant leverage. We also note that the company has positive EPS growth working in its favor. However, the firm has slimmer gross margins than its peers.

PepsiCo's Valuation Is in Line With Its Sector Averages:

PepsiCo has a trailing twelve month P/E ratio of 29.4, compared to an average of 24.36 for the Consumer Staples sector. Based on its EPS guidance of $8.13, the company has a forward P/E ratio of 21.7. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 10.0%. On this basis, the company's PEG ratio is 2.93, which suggests that it is overpriced. Furthermore, PepsiCo is likely overvalued compared to the book value of its equity, since its P/B ratio of 11.6 is higher than the sector average of 4.29. The company's shares are currently trading 274.1% above their Graham number.

There's an Analyst Consensus of Some Upside Potential for PepsiCo:

The 19 analysts following PepsiCo have set target prices ranging from $156.0 to $220.0 per share, for an average of $189.72 with a buy rating. As of April 2023, the company is trading -7.0% away from its average target price, indicating that there is an analyst consensus of some upside potential.

PepsiCo has a very low short interest because 1.0% of the company's shares are sold short. Institutions own 76.0% of the company's shares, and the insider ownership rate stands at 0.16%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 9% stake in the company is worth $20,838,809,646.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.