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 on the other hand it scores bad on growth. PEP also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
PEP had positive earnings in the past year.
PEP had a positive operating cash flow in the past year.
Each year in the past 5 years PEP has been profitable.
PEP had a positive operating cash flow in each of the past 5 years.
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 71.88% of the companies in the same industry.
PEP has a better Return On Equity (50.95%) than 100.00% of its industry peers.
PEP's Return On Invested Capital of 16.68% is amongst the best of the industry. PEP outperforms 87.50% of its industry peers.
The Average Return On Invested Capital over the past 3 years for PEP is above the industry average of 11.57%.
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
The Profit Margin of PEP (10.24%) is better than 75.00% of its industry peers.
In the last couple of years the Profit Margin of PEP has remained more or less at the same level.
With a decent Operating Margin value of 15.92%, PEP is doing good in the industry, outperforming 65.63% of the companies in the same industry.
In the last couple of years the Operating Margin of PEP has remained more or less at the same level.
PEP's Gross Margin of 55.13% is fine compared to the rest of the industry. PEP outperforms 71.88% of its industry peers.
PEP's Gross Margin has been stable in the last couple of years.
| 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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), 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.
PEP has a worse debt/assets ratio than last year.
2.2 Solvency
PEP has an Altman-Z score of 3.64. This indicates that PEP is financially healthy and has little risk of bankruptcy at the moment.
With a decent Altman-Z score value of 3.64, PEP is doing good in the industry, outperforming 62.50% of the companies in the same industry.
The Debt to FCF ratio of PEP is 6.68, which is on the high side as it means it would take PEP, 6.68 years of fcf income to pay off all of its debts.
PEP has a Debt to FCF ratio (6.68) which is comparable to the rest of the industry.
A Debt/Equity ratio of 2.14 is on the high side and indicates that PEP has dependencies on debt financing.
The Debt to Equity ratio of PEP (2.14) is worse than 87.50% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.14 | ||
| Debt/FCF | 6.68 | ||
| Altman-Z | 3.64 |
ROIC/WACC2.12
WACC7.88%
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.
The Current ratio of PEP (0.83) is worse 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 has a Quick ratio of 0.65. This is in the lower half of the industry: PEP underperforms 62.50% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.83 | ||
| Quick Ratio | 0.65 |
3. Growth
3.1 Past
PEP shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 3.88%.
The Earnings Per Share has been growing by 8.13% on average over the past years. This is quite good.
PEP shows a decrease in Revenue. In the last year, the revenue decreased by -0.38%.
Measured over the past years, PEP shows a small growth in Revenue. The Revenue has been growing by 6.46% on average per year.
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 3.50% on average per year.
PEP is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 2.85% yearly.
EPS Next Y-2.41%
EPS Next 2Y1.73%
EPS Next 3Y3.12%
EPS Next 5Y3.5%
Revenue Next Year-0.12%
Revenue Next 2Y1.45%
Revenue Next 3Y2.07%
Revenue Next 5Y2.85%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 16.84, PEP is valued correctly.
Compared to the rest of the industry, the Price/Earnings ratio of PEP indicates a somewhat cheap valuation: PEP is cheaper than 75.00% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 27.30. PEP is valued slightly cheaper when compared to this.
Based on the Price/Forward Earnings ratio of 16.02, the valuation of PEP can be described as correct.
Based on the Price/Forward Earnings ratio, PEP is valued a bit cheaper than 71.88% of the companies in the same industry.
PEP is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 21.76, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.84 | ||
| Fwd PE | 16.02 |
4.2 Price Multiples
PEP's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. PEP is cheaper than 62.50% of the companies in the same industry.
PEP's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. PEP is cheaper than 68.75% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 25.52 | ||
| EV/EBITDA | 12.2 |
4.3 Compensation for Growth
The excellent profitability rating of PEP may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)2.07
EPS Next 2Y1.73%
EPS Next 3Y3.12%
5. Dividend
5.1 Amount
PEP has a Yearly Dividend Yield of 4.18%, which is a nice return.
PEP's Dividend Yield is rather good when compared to the industry average which is at 3.00. PEP pays more dividend than 93.75% of the companies in the same industry.
PEP's Dividend Yield is rather good when compared to the S&P500 average which is at 2.35.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.18% |
5.2 History
On average, the dividend of PEP grows each year by 6.80%, which is quite nice.
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 Years34
Div Non Decr Years34
5.3 Sustainability
PEP pays out 78.38% of its income as dividend. This is not a sustainable payout ratio.
PEP's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP78.38%
EPS Next 2Y1.73%
EPS Next 3Y3.12%
135.26
-0.82 (-0.6%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupFood, Beverage & Tobacco
GICS IndustryBeverages
Earnings (Last)
Earnings (Next)
Inst Owners78.94%
Inst Owner Change0.01%
Ins Owners0.17%
Ins Owner Change2.12%
Market Cap185.45B
Analysts67.14
Price Target151.9 (12.3%)
Short Float %1.2%
Short Ratio1.71
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.18% |
Yearly Dividend5.27
Dividend Growth(5Y)6.8%
DP78.38%
Div Incr Years34
Div Non Decr Years34
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)0%
PT rev (3m)-8.53%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-11.74%
EPS NY rev (1m)-0.17%
EPS NY rev (3m)-4.85%
Revenue NQ rev (1m)0.08%
Revenue NQ rev (3m)-0.37%
Revenue NY rev (1m)0.14%
Revenue NY rev (3m)0.01%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.84 | ||
| Fwd PE | 16.02 | ||
| P/S | 2.03 | ||
| P/FCF | 25.52 | ||
| P/OCF | 14.75 | ||
| P/B | 10.08 | ||
| P/tB | N/A | ||
| EV/EBITDA | 12.2 |
EPS(TTM)8.03
EY5.94%
EPS(NY)8.44
Fwd EY6.24%
FCF(TTM)5.3
FCFY3.92%
OCF(TTM)9.17
OCFY6.78%
SpS66.75
BVpS13.41
TBVpS-11.19
PEG (NY)N/A
PEG (5Y)2.07
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 | 3.64 |
F-Score6
WACC7.88%
ROIC/WACC2.12
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-2.41%
EPS Next 2Y1.73%
EPS Next 3Y3.12%
EPS Next 5Y3.5%
Revenue 1Y (TTM)-0.38%
Revenue growth 3Y4.94%
Revenue growth 5Y6.46%
Sales Q2Q%-1.81%
Revenue Next Year-0.12%
Revenue Next 2Y1.45%
Revenue Next 3Y2.07%
Revenue Next 5Y2.85%
EBIT growth 1Y4.95%
EBIT growth 3Y8.98%
EBIT growth 5Y6.67%
EBIT Next Year20.6%
EBIT Next 3Y10.35%
EBIT Next 5Y7.49%
FCF growth 1Y36.44%
FCF growth 3Y0.94%
FCF growth 5Y5.82%
OCF growth 1Y18.71%
OCF growth 3Y2.49%
OCF growth 5Y5.33%