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1. Company Snapshot

1.a. Company Description

PepsiCo, Inc.manufactures, markets, distributes, and sells various beverages and convenient foods worldwide.The company operates through seven segments: Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; Africa, Middle East and South Asia; and Asia Pacific, Australia and New Zealand and China Region.


It provides dips, cheese-flavored snacks, and spreads, as well as corn, potato, and tortilla chips; cereals, rice, pasta, mixes and syrups, granola bars, grits, oatmeal, rice cakes, simply granola, and side dishes; beverage concentrates, fountain syrups, and finished goods; ready-to-drink tea, coffee, and juices; dairy products; and sparkling water makers and related products.It serves wholesale and other distributors, foodservice customers, grocery stores, drug stores, convenience stores, discount/dollar stores, mass merchandisers, membership stores, hard discounters, e-commerce retailers and authorized independent bottlers, and others through a network of direct-store-delivery, customer warehouse, and distributor networks, as well as directly to consumers through e-commerce platforms and retailers.The company was founded in 1898 and is headquartered in Purchase, New York.

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1.b. Last Insights on PEP

PepsiCo's recent performance was driven by its solid Q2 earnings release, which showcased the company's resilience and long-term investment appeal. The company's innovation-driven growth strategy, cost-cutting initiatives, and strong international sales growth have contributed to its positive momentum. Additionally, PepsiCo's ability to maintain its full-year outlook despite modest revenue growth and falling profits has instilled confidence in investors.

1.c. Company Highlights

2. PepsiCo's 2025 Earnings: A Strong Finish with Promising 2026 Outlook

PepsiCo reported a strong fourth-quarter earnings, with EPS coming in at $2.26, beating analyst estimates of $2.24. The company's revenue growth was in line with expectations, and its guidance for 2026 suggests continued momentum, with organic sales expected to be at the higher end of the range in the second half of the year. The company's financial performance was driven by its PepsiCo Frito-Lay North America (PFNA) segment, which is expected to return to volume growth in 2026.

Publication Date: Feb -04

📋 Highlights
  • PFNA Affordability Initiatives:: Surgical price reductions of up to 15% on select items to drive volume growth in 2026.
  • Frito-Lay Growth:: Double-digit shelf space gains expected, with volume, revenue, and margin improvements in 2026.
  • Single-Serve Focus:: 70% of U.S. food business in single-serve formats, aligning with GLP-1-driven demand for portion control.
  • EPS Guidance:: Balanced growth between 2026 halves, with sales acceleration in the second half driven by North America.
  • Advertising Strategy:: 2025 expenses declined due to efficiency; 2026 spending to increase for brand relaunches and integration.

Segment Performance

The PFNA segment is expected to drive growth and profit margin progress, driven by investments in affordability initiatives and a focus on innovation, including healthier options. The company is also investing in advertising, with plans to increase spending in 2026 after a decline in 2025. The company's beverage business in North America is also expected to contribute to growth, driven by energy portfolio growth, including CELSIUS and Alani.

Guidance and Outlook

PepsiCo's guidance for 2026 suggests a balanced EPS between the first and second halves of the year, with sales growth expected to strengthen in the second half. The company is adapting to changing consumer habits, particularly with the rise of GLP medication, by focusing on portion control, hydration, fiber, and protein. Analysts estimate next year's revenue growth at 3.3%, which is in line with the company's guidance.

Valuation

PepsiCo's current valuation metrics suggest a reasonable price for the stock. The company's P/E Ratio is 27.1, P/B Ratio is 10.94, and P/S Ratio is 2.37. The company's ROE is 43.03%, and ROIC is 11.3%, indicating a strong return on equity and invested capital. The Dividend Yield is 3.45%, providing a relatively stable source of return for investors.

Strategic Initiatives

The company is focused on executing its strategic plans, including relaunching brands like Gatorade, Quaker, and Lay's with a focus on simplicity, nature, and freshness. The company is also testing merged food and beverage distribution in Texas and Florida to eliminate duplications and create advantage on integration. These initiatives are expected to drive growth and profit margin progress in 2026 and beyond.

3. NewsRoom

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PepsiCo: Improving, But Core Problems Remain

Mar -12

Source: seekingalpha.com

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Sell Options On PepsiCo For A 10%+ Yield

Mar -11

Source: seekingalpha.com

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PepsiCo: Shares Pop In Early 2026, Valuation Is Still Appealing

Mar -11

Source: seekingalpha.com

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PepsiCo: Headwinds Are Finally Retreating (Rating Upgrade)

Mar -11

Source: seekingalpha.com

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Coke vs Pepsi: Which Dividend Is Actually Safer?

Mar -10

Source: 247wallst.com

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Step Aside, Protein. Here's Why 'Fibermaxxing' Is America's Latest Grocery Store Obsession

Mar -10

Source: investopedia.com

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Blair William & Co. IL Lowers Holdings in PepsiCo, Inc. $PEP

Mar -08

Source: defenseworld.net

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Had You Invested $1,000 in Coca-Cola or PepsiCo 10 Years Ago, Here's What You'd Have Today

Mar -07

Source: 247wallst.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.37%)

6. Segments

Pepsi Co Beverages North America

Expected Growth: 4.5%

PepsiCo Beverages North America's growth is driven by increasing demand for low-calorie beverages, expanding distribution channels, and strategic marketing initiatives, including e-commerce platforms and partnerships with foodservice providers.

Frito-Lay North America

Expected Growth: 4.2%

PepsiCo’s snack food division is expected to grow driven by increasing demand for convenient and healthy snacks, expansion of e-commerce channels, and strategic acquisitions, such as the purchase of Pioneer Foods, which will strengthen the company’s position in the North American market.

Europe Continent

Expected Growth: 2.5%

PepsiCo, Inc.'s European operations expect steady growth driven by increasing demand for healthier beverages, expansion in Eastern Europe, and strategic partnerships, which will contribute to a moderate growth rate.

Latin America

Expected Growth: 5.6%

PepsiCo's Latin American operations are driven by increasing demand for convenient and healthy beverages, particularly in Mexico and Brazil, where the company has a strong presence. The region's growing middle class and urbanization are also contributing to the segment's growth.

Africa, Middle East and South Asia

Expected Growth: 5.2%

PepsiCo's Africa, Middle East and South Asia region is expected to grow driven by increasing urbanization, a growing middle class, and rising demand for convenience foods and beverages, particularly in countries such as Nigeria, Egypt, and India.

Asia Pacific, Australia and New Zealand and China Region

Expected Growth: 6.2%

PepsiCo's Asia Pacific, Australia, New Zealand and China region is driven by increasing demand for healthy beverages, growing middle-class populations, and rising urbanization rates.

Quaker Foods North America

Expected Growth: 3.5%

Quaker Foods North America's growth is driven by increasing demand for healthy and convenient food options, as well as the division's strong brand portfolio, including Quaker Oats and Life cereal. Innovation in new products and packaging will also support growth.

7. Detailed Products

Pepsi

A carbonated soft drink that is crisp, refreshing, and perfect for any occasion

Lay's Potato Chips

A delicious and crunchy snack made from potatoes, perfect for munching on the go

Gatorade

A sports drink that helps replenish electrolytes and fluids, perfect for athletes and fitness enthusiasts

Tropicana Orange Juice

A 100% orange juice that is a great way to start your day with a boost of vitamin C

Quaker Oats

A warm and comforting bowl of oatmeal that's perfect for a healthy breakfast

Doritos

A flavorful and crunchy tortilla chip that's perfect for snacking

Cheetos

A cheesy and addictive snack that's perfect for munching on the go

Mountain Dew

A sweet and citrusy soft drink that's perfect for a quick energy boost

Aquafina

A refreshing and pure bottled water that's perfect for staying hydrated

8. PepsiCo, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

PepsiCo, Inc. faces moderate threat from substitutes, as consumers have various beverage options available in the market. However, the company's strong brand portfolio and diversified product offerings mitigate this threat to some extent.

Bargaining Power Of Customers

PepsiCo, Inc. has a large and diversified customer base, which reduces the bargaining power of individual customers. Additionally, the company's strong brand presence and wide distribution network make it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

PepsiCo, Inc. has a moderate level of dependence on its suppliers, particularly for raw materials like sugar, corn, and other ingredients. However, the company's large scale of operations and long-term contracts with suppliers help mitigate this risk.

Threat Of New Entrants

The threat of new entrants is low in the beverage industry, as it requires significant investment in manufacturing, marketing, and distribution. PepsiCo, Inc.'s strong brand presence, extensive distribution network, and economies of scale make it difficult for new entrants to compete.

Intensity Of Rivalry

The beverage industry is highly competitive, with PepsiCo, Inc. facing intense rivalry from Coca-Cola, Dr Pepper Snapple, and other players. The company's strong brand portfolio and marketing efforts help it maintain its market share, but the rivalry remains a significant challenge.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 70.71%
Debt Cost 3.95%
Equity Weight 29.29%
Equity Cost 6.56%
WACC 4.71%
Leverage 241.37%

11. Quality Control: PepsiCo, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Growth: 5.8

Quality: 6.5

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Momentum: 7.0

Volatility: 9.7

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Coca-Cola

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PepsiCo

A-Score: 5.6/10

Value: 2.6

Growth: 4.7

Quality: 5.6

Yield: 7.0

Momentum: 4.0

Volatility: 9.7

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A-Score: 4.7/10

Value: 3.8

Growth: 3.0

Quality: 5.8

Yield: 5.0

Momentum: 2.5

Volatility: 8.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

159.88$

Current Price

159.88$

Potential

-0.00%

Expected Cash-Flows