Do Analysts Recommend PEP at $173.67?

One of the standouts of today's afternoon trading session was PepsiCo, which logged a 1.4% performance and outperformed the S&P 500 by 1.0%. The Beverages stock is now trading at $173.67 per share and may still have upside potential because it is still -7.61% under its average target price of $187.98. Analysts have set target prices ranging from $151.0 to $210.0 dollars per share, and have given the stock an average rating of buy.

The market seems to share this optimistic view, since PepsiCo has a short interest of only 1.2% (this is the percentage of the share float that is being shorted). Each short position represents an investor's expectation that the price of the stock will decrease in the future.

Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.

Another way to gauge the sentiment on PepsiCo is to look at the percentage of institutions that are invested in the stock. In this case, 76.9% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.

If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.

Overall, there is mixed market sentiment on PepsiCo because its an analyst consensus of some upside potential, a buy rating, a very low short interest, and an average number of institutional investors. Warren Buffett famously said that in the short term, markets are voting mechanisms, but in the long term, they are weighing mechanisms. This means that long term investors should be aware of a stock's fundamentals before committing.

Buffett was one of the fist investors to focus on free cash flow as a yardstick for a company's health. Here are PEP's recent cash flows:

Date Reported Cash Flow from Operations ($ k) Capital expenditures ($ k) Free Cash Flow ($ k) YoY Growth (%)
2023 15,461,000 7,031,000 8,430,000 71.76
2022 10,637,000 5,729,000 4,908,000 -38.85
2021 13,956,000 5,930,000 8,026,000 20.75
2020 12,075,000 5,428,000 6,647,000 17.9
2019 11,037,000 5,399,000 5,638,000 -10.15
2018 10,502,000 4,227,000 6,275,000
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.