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PepsiCo powerpoint

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Created 4/29/10

Created 4/29/10

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    PepsiCo powerpoint PepsiCo powerpoint Presentation Transcript

    • PepsiCo (PEP)
      Brad Schwer
    • Recommendation: Buy
      Estimated Value: $71.06-$79.04
      Current Stock Price: $66.29
      Sector: Consumer StaplesIndustry: Soft Drinks
    • Company Information
      Fiscal year ends 12/31
      Non-alcoholic
      Carbonated and non-carbonated beverages
      Various foods and snacks
      Headquarters in Purchase, NY
      Beverage concentrates, fountain syrups, and finished goods
    • Familiar Products
      Pepsi/Diet Pepsi
      Mountain Dew
      Aquafina (bottled water)
      7UP
      SoBeLifewater
      Tropicana
      Lays, Doritos, Ruffles
      Quaker oatmeal/Rice-A-Roni
    • Direct Competitors
    • Business Units
      1. PepsiCo Americas Foods*
      2. PepsiCo Americas Beverages*
      3. PepsiCo International
      * Includes Latin American business
    • PepsiCo 2009
      Source: Edward Jones
    • Sales and EPS Growth
      • Compounded sales growth rate: 7.3%
      • Compounded Baseline EPS growth rate: 8.7%
    • Value Line Projections
      12% Yr to Yr Gain
      Baseline Projections
      12% Yr to Yr Gain
    • Value Line Projections
      17% Yr to Yr Gain
      Baseline Projections
      28% Yr to Yr Gain
    • SWOT Analysis
    • SWOT Analysis
    • P/E Valuation
      Average Forward P/E for S&P 500: 14.5
    • P/E Valuation
      5-year average P/E: 18
      Forward P/E: 16
      Averaged P/E multiple: 17x
      Estimated projection: 17*$4.18
      $71.06 per share
    • DCF Data Input
    • Valuation
      DCF intrinsic value: $79.24
      P/E valuation: $71.06
      Valuation range
      $71.06-$79.24
      Current Stock Price
      $66.29 (Undervalued)
    • Recommendation: Buy
      Estimated Value: $71.06-$79.24
      Current Price: $66.29
    • Questions from the Board of Directors?
    • PepsiCo vs. Coca-Cola
    • Foreign Currency Exposure
      • PepsiCo
      • Coca-Cola
      • Generated 74% of net operating revenue from outside U.S.
      • Uses 72 functional currencies
      • Currency impact on net revenue
      • 2009: -11%
      • Uses derivatives to hedge
      • Forward contracts
      • Purchase currency options
      • Generated 48% of net operating revenue from outside U.S.
      • Currency impact on net revenue
      • 2009: -5%
      • Uses derivatives to hedge
      • Forward contracts
      • Commodity contracts
    • Acquisition
      PepsiAmericas
      Acquired remaining 57% stake
      The Pepsi Bottling Group
      Acquired remaining 67.4% stake
      Total cost of acquisition
      $7.8 billion
      Half cash/Half PEP common stock
      Adds $4 billion in debt to PEP balance sheet
      Increase in EPS of $0.15 when fully realized in 2012
      Create synergies of $300 million by 2012
      Cost efficiency and better revenue opportunities