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Smartkarma

Equity Bottom-Up

Short Pepsi Punchline During the last few years, Pepsi hasn’t really grown volumes but has instead boosted its earnings by taking price. This year, due to inflationary headwinds, FX moves, and Russia/Ukraine,...<a target="_blank" href="https://www.valueinvestorsclub.com/idea/PEPSICO_INC/0526270382">Read the article on Value Investor Club »</a>

Morningstar

Morningstar, Inc.

We think PepsiCo’s leading portfolio of beverage and snack brands has allowed it to carve out a wide moat, ensuring robust returns on invested capital over the long run. We believe both Pepsi and wide-moat Coca-Cola will continue dominating the domestic nonalcoholic beverage market (according to Beverage Digest, these firms hold a combined volume share of around 50%), as their entrenched retail relationships and economies of scale create meaningful barriers to entry. Moreover, we expect rational…

Pepsi's top-line momentum persisted in the second quarter, with organic sales positive in each of the firm’s six segments and up 4.5% overall (versus our roughly 4% full-year estimate). While we intend to reassess our assumptions (3% to 4% sales growth and average operating margin around 17% over the next five years), we aren't anticipating a material change to our $125 fair value estimate. We continue to view strengthened pricing (up 4% in the quarter) as the highlight of results, as we think…

Wide-moat Pepsi began 2019 on a strong note, with organic sales up 5% in the first quarter (slightly ahead of our 4% full-year estimate) and operating margin expanding 120 basis points to 15.6% (matching our full-year estimate). We don't expect a material change to our $122 fair value estimate as we evaluate these results, and we reiterate our outlook for 3%-4% organic growth and midteens operating margin over the next five years. Continued strength in Frito-Lay North America (30% of sales) and…

United States

PepsiCo, Inc. operates worldwide beverage, snack and food businesses. The Company manufactures or uses contract manufacturers, markets and sells a variety of grain-based snacks, carbonated and non-carbonated beverages and foods in countries throughout the world.

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