PEPSICO INC (PEP) Stock Fundamental Analysis
NASDAQ:PEP - Nasdaq - US7134481081 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to PEP. PEP was compared to 32 industry peers in the Beverages industry. PEP scores excellent on profitability, but there are concerns on its financial health. PEP has a valuation in line with the averages, but it does not seem to be growing. PEP also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
In the past year PEP was profitable.
In the past year PEP had a positive cash flow from operations.
In the past 5 years PEP has always been profitable.
Each year in the past 5 years PEP had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of 9.21%, PEP is in the better half of the industry, outperforming 65.63% of the companies in the same industry.
The Return On Equity of PEP (50.95%) is better than 100.00% of its industry peers.
PEP has a better Return On Invested Capital (16.68%) than 87.50% of its industry peers.
PEP had an Average Return On Invested Capital over the past 3 years of 15.79%. This is above the industry average of 11.91%.
The last Return On Invested Capital (16.68%) for PEP is above the 3 year average (15.79%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.21% | ||
| ROE | 50.95% | ||
| ROIC | 16.68% |
ROA(3y)9.44%
ROA(5y)8.85%
ROE(3y)51.36%
ROE(5y)50.9%
ROIC(3y)15.79%
ROIC(5y)14.66%
1.3 Margins
With a decent Profit Margin value of 10.24%, PEP is doing good in the industry, outperforming 75.00% of the companies in the same industry.
In the last couple of years the Profit Margin of PEP has remained more or less at the same level.
Looking at the Operating Margin, with a value of 15.92%, PEP is in the better half of the industry, outperforming 65.63% of the companies in the same industry.
PEP's Operating Margin has been stable in the last couple of years.
With a decent Gross Margin value of 55.13%, PEP is doing good in the industry, outperforming 71.88% of the companies in the same industry.
In the last couple of years the Gross Margin of PEP has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 15.92% | ||
| PM (TTM) | 10.24% | ||
| GM | 55.13% |
OM growth 3Y3.85%
OM growth 5Y0.2%
PM growth 3Y2.85%
PM growth 5Y-0.86%
GM growth 3Y1.08%
GM growth 5Y-0.08%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so PEP is creating value.
PEP has about the same amout of shares outstanding than it did 1 year ago.
The number of shares outstanding for PEP has been reduced compared to 5 years ago.
The debt/assets ratio for PEP is higher compared to a year ago.
2.2 Solvency
PEP has an Altman-Z score of 3.59. This indicates that PEP is financially healthy and has little risk of bankruptcy at the moment.
With a Altman-Z score value of 3.59, PEP perfoms like the industry average, outperforming 59.38% of the companies in the same industry.
PEP has a debt to FCF ratio of 6.68. This is a slightly negative value and a sign of low solvency as PEP would need 6.68 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 6.68, PEP is in line with its industry, outperforming 56.25% of the companies in the same industry.
A Debt/Equity ratio of 2.14 is on the high side and indicates that PEP has dependencies on debt financing.
PEP has a worse Debt to Equity ratio (2.14) than 87.50% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.14 | ||
| Debt/FCF | 6.68 | ||
| Altman-Z | 3.59 |
ROIC/WACC2.11
WACC7.92%
2.3 Liquidity
PEP has a Current Ratio of 0.83. This is a bad value and indicates that PEP is not financially healthy enough and could expect problems in meeting its short term obligations.
PEP has a worse Current ratio (0.83) than 75.00% of its industry peers.
A Quick Ratio of 0.65 indicates that PEP may have some problems paying its short term obligations.
PEP's Quick ratio of 0.65 is on the low side compared to the rest of the industry. PEP is outperformed by 65.63% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.83 | ||
| Quick Ratio | 0.65 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 3.88% over the past year.
PEP shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 8.13% yearly.
PEP shows a decrease in Revenue. In the last year, the revenue decreased by -0.38%.
The Revenue has been growing slightly by 6.46% on average over the past years.
EPS 1Y (TTM)3.88%
EPS 3Y9.3%
EPS 5Y8.13%
EPS Q2Q%-8.07%
Revenue 1Y (TTM)-0.38%
Revenue growth 3Y4.94%
Revenue growth 5Y6.46%
Sales Q2Q%-1.81%
3.2 Future
Based on estimates for the next years, PEP will show a small growth in Earnings Per Share. The EPS will grow by 5.18% on average per year.
The Revenue is expected to grow by 4.00% on average over the next years.
EPS Next Y-2.24%
EPS Next 2Y1.82%
EPS Next 3Y3.59%
EPS Next 5Y5.18%
Revenue Next Year-0.27%
Revenue Next 2Y1.35%
Revenue Next 3Y2.07%
Revenue Next 5Y4%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 16.11, PEP is valued correctly.
81.25% of the companies in the same industry are more expensive than PEP, based on the Price/Earnings ratio.
PEP's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.82.
The Price/Forward Earnings ratio is 15.29, which indicates a correct valuation of PEP.
PEP's Price/Forward Earnings ratio is rather cheap when compared to the industry. PEP is cheaper than 81.25% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 21.76. PEP is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.11 | ||
| Fwd PE | 15.29 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, PEP is valued a bit cheaper than the industry average as 68.75% of the companies are valued more expensively.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of PEP indicates a somewhat cheap valuation: PEP is cheaper than 68.75% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 24.4 | ||
| EV/EBITDA | 11.82 |
4.3 Compensation for Growth
PEP has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.98
EPS Next 2Y1.82%
EPS Next 3Y3.59%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 4.33%, PEP is a good candidate for dividend investing.
PEP's Dividend Yield is rather good when compared to the industry average which is at 2.83. PEP pays more dividend than 93.75% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.36, PEP pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.33% |
5.2 History
The dividend of PEP is nicely growing with an annual growth rate of 6.80%!
PEP has been paying a dividend for at least 10 years, so it has a reliable track record.
PEP has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)6.8%
Div Incr Years33
Div Non Decr Years33
5.3 Sustainability
PEP pays out 78.38% of its income as dividend. This is not a sustainable payout ratio.
The dividend of PEP is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP78.38%
EPS Next 2Y1.82%
EPS Next 3Y3.59%
129.34
-0.78 (-0.6%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupFood, Beverage & Tobacco
GICS IndustryBeverages
Earnings (Last)
Earnings (Next)
Inst Owners78.71%
Inst Owner Change0.15%
Ins Owners0.15%
Ins Owner Change2.07%
Market Cap177.34B
Analysts67.14
Price Target153.49 (18.67%)
Short Float %1.6%
Short Ratio2.73
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.33% |
Yearly Dividend5.27
Dividend Growth(5Y)6.8%
DP78.38%
Div Incr Years33
Div Non Decr Years33
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-0.74%
Min EPS beat(2)-1.39%
Max EPS beat(2)-0.08%
EPS beat(4)1
Avg EPS beat(4)0.77%
Min EPS beat(4)-1.39%
Max EPS beat(4)4.63%
EPS beat(8)5
Avg EPS beat(8)2.43%
EPS beat(12)9
Avg EPS beat(12)3.2%
EPS beat(16)12
Avg EPS beat(16)3.45%
Revenue beat(2)0
Avg Revenue beat(2)-0.76%
Min Revenue beat(2)-1.36%
Max Revenue beat(2)-0.16%
Revenue beat(4)0
Avg Revenue beat(4)-1.4%
Min Revenue beat(4)-2.81%
Max Revenue beat(4)-0.16%
Revenue beat(8)1
Avg Revenue beat(8)-0.95%
Revenue beat(12)5
Avg Revenue beat(12)0.45%
Revenue beat(16)9
Avg Revenue beat(16)1.3%
PT rev (1m)-7.58%
PT rev (3m)-13.86%
EPS NQ rev (1m)-11.68%
EPS NQ rev (3m)-11.83%
EPS NY rev (1m)-4.49%
EPS NY rev (3m)-4.76%
Revenue NQ rev (1m)-0.45%
Revenue NQ rev (3m)-0.64%
Revenue NY rev (1m)-0.14%
Revenue NY rev (3m)-2.37%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.11 | ||
| Fwd PE | 15.29 | ||
| P/S | 1.94 | ||
| P/FCF | 24.4 | ||
| P/OCF | 14.1 | ||
| P/B | 9.64 | ||
| P/tB | N/A | ||
| EV/EBITDA | 11.82 |
EPS(TTM)8.03
EY6.21%
EPS(NY)8.46
Fwd EY6.54%
FCF(TTM)5.3
FCFY4.1%
OCF(TTM)9.17
OCFY7.09%
SpS66.75
BVpS13.41
TBVpS-11.19
PEG (NY)N/A
PEG (5Y)1.98
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.21% | ||
| ROE | 50.95% | ||
| ROCE | 20.75% | ||
| ROIC | 16.68% | ||
| ROICexc | 19% | ||
| ROICexgc | 41.96% | ||
| OM | 15.92% | ||
| PM (TTM) | 10.24% | ||
| GM | 55.13% | ||
| FCFM | 7.94% |
ROA(3y)9.44%
ROA(5y)8.85%
ROE(3y)51.36%
ROE(5y)50.9%
ROIC(3y)15.79%
ROIC(5y)14.66%
ROICexc(3y)17.92%
ROICexc(5y)16.59%
ROICexgc(3y)38.78%
ROICexgc(5y)38.65%
ROCE(3y)20.23%
ROCE(5y)18.63%
ROICexcg growth 3Y1.22%
ROICexcg growth 5Y-0.39%
ROICexc growth 3Y8.31%
ROICexc growth 5Y3.24%
OM growth 3Y3.85%
OM growth 5Y0.2%
PM growth 3Y2.85%
PM growth 5Y-0.86%
GM growth 3Y1.08%
GM growth 5Y-0.08%
F-Score6
Asset Turnover0.9
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.14 | ||
| Debt/FCF | 6.68 | ||
| Debt/EBITDA | 2.14 | ||
| Cap/Depr | 136.92% | ||
| Cap/Sales | 5.8% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 68.16% | ||
| Profit Quality | 77.57% | ||
| Current Ratio | 0.83 | ||
| Quick Ratio | 0.65 | ||
| Altman-Z | 3.59 |
F-Score6
WACC7.92%
ROIC/WACC2.11
Cap/Depr(3y)151.67%
Cap/Depr(5y)153.05%
Cap/Sales(3y)5.95%
Cap/Sales(5y)5.94%
Profit Quality(3y)75.09%
Profit Quality(5y)81.31%
High Growth Momentum
Growth
EPS 1Y (TTM)3.88%
EPS 3Y9.3%
EPS 5Y8.13%
EPS Q2Q%-8.07%
EPS Next Y-2.24%
EPS Next 2Y1.82%
EPS Next 3Y3.59%
EPS Next 5Y5.18%
Revenue 1Y (TTM)-0.38%
Revenue growth 3Y4.94%
Revenue growth 5Y6.46%
Sales Q2Q%-1.81%
Revenue Next Year-0.27%
Revenue Next 2Y1.35%
Revenue Next 3Y2.07%
Revenue Next 5Y4%
EBIT growth 1Y4.95%
EBIT growth 3Y8.98%
EBIT growth 5Y6.67%
EBIT Next Year23.96%
EBIT Next 3Y11.41%
EBIT Next 5Y8.71%
FCF growth 1Y36.44%
FCF growth 3Y0.94%
FCF growth 5Y5.82%
OCF growth 1Y18.71%
OCF growth 3Y2.49%
OCF growth 5Y5.33%