PEP

Thinking of Investing in PEP? What Our Analysts Know.

PepsiCo logged a -0.7% change during today's morning session, and is now trading at a price of $167.0 per share.

Over the last year, PepsiCo logged a -5.0% change, 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 -20.0%. As of April 2023, the company's 50-day average price was $168.08. 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 2.9% dividend yield over the last 12 months.

Growing Revenues With Increasing Reinvestment in the Business:

2018 2019 2020 2021 2022 2023
Revenue (MM) $64,661 $67,161 $70,372 $79,474 $86,392 $149,564
Gross Margins 55% 55% 55% 53% 53% 55%
Operating Margins 16.0% 15.0% 14.0% 14.0% 13.0% 16.0%
Net Margins 19.0% 11.0% 10.0% 10.0% 10.0% 12.0%
Net Income (MM) $12,559 $7,353 $7,175 $7,679 $8,978 $18,433
Net Interest Expense (MM) $1,219 $935 $1,128 $1,863 $939 $1,405
Depreciation & Amort. (MM) $2,399 $2,432 $2,548 $2,710 $2,763 $2,882
Earnings Per Share $8.78 $5.2 $5.12 $5.49 $6.42 $13.23
Diluted Shares (MM) 1,428 1,411 1,395 1,389 1,387 5,535
Free Cash Flow (MM) $6,133 $5,417 $6,373 $6,991 $5,604 $6,947
Capital Expenditures (MM) $3,282 $4,232 $4,240 $4,625 $5,207 $5,188
Net Current Assets (MM) -$41,153 -$46,034 -$56,365 -$54,443 -$53,375 -$52,334
Long Term Debt (MM) $28,295 $29,148 $40,370 $36,026 $35,657 $35,657
Net Debt / EBITDA 2.18 2.25 3.04 2.72 2.64 1.42

PepsiCo has growing revenues and increasing reinvestment in the business, positive EPS growth, and healthy leverage. However, the firm suffers from slimmer gross margins than its peers and weak operating margins with a stable trend. Finally, we note that PepsiCo has irregular cash flows.

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

PepsiCo has a trailing twelve month P/E ratio of 28.0, compared to an average of 24.36 for the Consumer Staples sector. Based on its EPS guidance of $8.15, the company has a forward P/E ratio of 20.6. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 7.1%. On this basis, the company's PEG ratio is 3.96, 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 12.21 is higher than the sector average of 4.29. The company's shares are currently trading 424.2% above their Graham number.

Analysts Give PepsiCo an Average Rating of Buy:

The 21 analysts following PepsiCo have set target prices ranging from $151.0 to $220.0 per share, for an average of $189.08 with a buy rating. As of April 2023, the company is trading -11.1% 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 1.1% 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 $21,935,589,946.

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.

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