PepsiCo shares fell by -1.8% during the day's afternoon session, and are now trading at a price of $168.46. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
PepsiCo Has Elevated P/B and P/E Ratios:
PepsiCo, Inc. manufactures, markets, distributes, and sells various beverages and convenient foods worldwide. The company belongs to the Consumer Staples sector, which has an average price to earnings (P/E) ratio of 21.21 and an average price to book (P/B) ratio of 4.12. In contrast, PepsiCo has a trailing 12 month P/E ratio of 28.1 and a P/B ratio of 12.32.
PepsiCo's PEG ratio is 2.63, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Growing Revenues With a Flat Capital Expenditure Trend:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $64,661 | $67,161 | $29,826 | $34,037 | $21,971 | $149,564 |
| Revenue Growth | n/a | 3.87% | -55.59% | 14.12% | -35.45% | 580.73% |
| Operating Margins | 16% | 15% | 14% | 16% | 15% | 16% |
| Net Margins | 19% | 11% | 10% | 12% | 12% | 12% |
| Net Income (MM) | $12,515 | $7,314 | $2,984 | $4,072 | $2,702 | $18,292 |
| Net Interest Expense (MM) | $602 | $427 | $525 | $499 | $190 | $1,405 |
| Depreciation & Amort. (MM) | $3,469 | $3,488 | $3,670 | $3,923 | $3,318 | $2,882 |
| Earnings Per Share | $8.78 | $5.2 | $2.14 | $2.94 | $1.95 | $13.23 |
| Diluted Shares (MM) | 1,425 | 1,407 | 1,392 | 1,389 | 1,387 | 1,383 |
| Free Cash Flow (MM) | $6,275 | $5,638 | $6,647 | $8,026 | $4,908 | $6,947 |
| Capital Expenditures (MM) | $4,227 | $5,399 | $5,428 | $5,930 | $5,729 | $5,188 |
| Current Ratio | 0.99 | 0.86 | 0.98 | 0.83 | 0.8 | 0.88 |
| Total Debt (MM) | $36,274 | $34,916 | $47,508 | $44,206 | $42,167 | $35,837 |
| Net Debt / EBITDA | 2.03 | 2.13 | 4.97 | 4.12 | 5.58 | 0.95 |
