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PepsiCo powerpoint
PepsiCo powerpoint
PepsiCo powerpoint
PepsiCo powerpoint
PepsiCo powerpoint
PepsiCo powerpoint
PepsiCo powerpoint
PepsiCo powerpoint
PepsiCo powerpoint
PepsiCo powerpoint
PepsiCo powerpoint
PepsiCo powerpoint
PepsiCo powerpoint
PepsiCo powerpoint
PepsiCo powerpoint
PepsiCo powerpoint
PepsiCo powerpoint
PepsiCo powerpoint
PepsiCo powerpoint
PepsiCo powerpoint
PepsiCo powerpoint
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PepsiCo powerpoint

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Created 4/29/10

Created 4/29/10

Published in: Economy & Finance
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  • 1. PepsiCo (PEP)<br />Brad Schwer<br />
  • 2. Recommendation: Buy<br />Estimated Value: $71.06-$79.04<br />Current Stock Price: $66.29<br />Sector: Consumer StaplesIndustry: Soft Drinks<br />
  • 3. Company Information<br />Fiscal year ends 12/31<br />Non-alcoholic <br />Carbonated and non-carbonated beverages<br />Various foods and snacks<br />Headquarters in Purchase, NY<br />Beverage concentrates, fountain syrups, and finished goods<br />
  • 4. Familiar Products<br />Pepsi/Diet Pepsi<br />Mountain Dew<br />Aquafina (bottled water)<br />7UP<br />SoBeLifewater<br />Tropicana <br />Lays, Doritos, Ruffles<br />Quaker oatmeal/Rice-A-Roni<br />
  • 5. Direct Competitors <br />
  • 6. Business Units<br />1. PepsiCo Americas Foods*<br />2. PepsiCo Americas Beverages*<br />3. PepsiCo International <br />* Includes Latin American business<br />
  • 7. PepsiCo 2009<br />Source: Edward Jones<br />
  • 8. Sales and EPS Growth<br /><ul><li>Compounded sales growth rate: 7.3%
  • 9. Compounded Baseline EPS growth rate: 8.7% </li></li></ul><li>Value Line Projections<br />12% Yr to Yr Gain<br />Baseline Projections<br />12% Yr to Yr Gain<br />
  • 10. Value Line Projections<br />17% Yr to Yr Gain<br />Baseline Projections<br />28% Yr to Yr Gain<br />
  • 11. SWOT Analysis<br />
  • 12. SWOT Analysis<br />
  • 13. P/E Valuation<br />Average Forward P/E for S&P 500: 14.5 <br />
  • 14. P/E Valuation<br />5-year average P/E: 18<br />Forward P/E: 16<br />Averaged P/E multiple: 17x<br />Estimated projection: 17*$4.18<br />$71.06 per share<br />
  • 15. DCF Data Input<br />
  • 16. Valuation<br />DCF intrinsic value: $79.24<br />P/E valuation: $71.06<br />Valuation range<br />$71.06-$79.24<br />Current Stock Price<br />$66.29 (Undervalued)<br />
  • 17. Recommendation: Buy<br />Estimated Value: $71.06-$79.24<br />Current Price: $66.29<br />
  • 18. Questions from the Board of Directors?<br />
  • 19. PepsiCo vs. Coca-Cola<br />
  • 20. Foreign Currency Exposure<br /><ul><li>PepsiCo
  • 21. Coca-Cola
  • 22. Generated 74% of net operating revenue from outside U.S.
  • 23. Uses 72 functional currencies
  • 24. Currency impact on net revenue
  • 25. 2009: -11%
  • 26. Uses derivatives to hedge
  • 27. Forward contracts
  • 28. Purchase currency options
  • 29. Generated 48% of net operating revenue from outside U.S.
  • 30. Currency impact on net revenue
  • 31. 2009: -5%
  • 32. Uses derivatives to hedge
  • 33. Forward contracts
  • 34. Commodity contracts</li></li></ul><li>Acquisition<br />PepsiAmericas<br />Acquired remaining 57% stake<br />The Pepsi Bottling Group<br />Acquired remaining 67.4% stake<br />Total cost of acquisition<br />$7.8 billion<br />Half cash/Half PEP common stock<br />Adds $4 billion in debt to PEP balance sheet<br />Increase in EPS of $0.15 when fully realized in 2012<br />Create synergies of $300 million by 2012<br />Cost efficiency and better revenue opportunities<br />

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