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PepsiCo (PEP)<br />Brad Schwer<br />
Recommendation: Buy<br />Estimated Value: $71.06-$79.04<br />Current Stock Price: $66.29<br />Sector: Consumer StaplesIndu...
Company Information<br />Fiscal year ends 12/31<br />Non-alcoholic <br />Carbonated and non-carbonated beverages<br />Vari...
Familiar Products<br />Pepsi/Diet Pepsi<br />Mountain Dew<br />Aquafina (bottled water)<br />7UP<br />SoBeLifewater<br />T...
Direct Competitors <br />
Business Units<br />1.  PepsiCo Americas Foods*<br />2. PepsiCo Americas Beverages*<br />3. PepsiCo International <br />* ...
PepsiCo 2009<br />Source: Edward Jones<br />
Sales and EPS Growth<br /><ul><li>Compounded sales growth rate: 7.3%
Compounded Baseline EPS growth rate: 8.7% </li></li></ul><li>Value Line Projections<br />12% Yr to Yr Gain<br />Baseline P...
Value Line Projections<br />17% Yr to Yr Gain<br />Baseline Projections<br />28% Yr to Yr Gain<br />
SWOT Analysis<br />
SWOT Analysis<br />
P/E Valuation<br />Average Forward P/E for S&P 500: 14.5 <br />
P/E Valuation<br />5-year average P/E: 18<br />Forward P/E: 16<br />Averaged P/E multiple: 17x<br />Estimated projection: ...
DCF Data Input<br />
Valuation<br />DCF intrinsic value: $79.24<br />P/E valuation: $71.06<br />Valuation range<br />$71.06-$79.24<br />Current...
Recommendation:  Buy<br />Estimated Value: $71.06-$79.24<br />Current Price: $66.29<br />
Questions from the Board of Directors?<br />
PepsiCo vs. Coca-Cola<br />
Foreign Currency Exposure<br /><ul><li>PepsiCo
Coca-Cola
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PepsiCo powerpoint

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Transcript of "PepsiCo powerpoint"

  1. 1. PepsiCo (PEP)<br />Brad Schwer<br />
  2. 2. Recommendation: Buy<br />Estimated Value: $71.06-$79.04<br />Current Stock Price: $66.29<br />Sector: Consumer StaplesIndustry: Soft Drinks<br />
  3. 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. 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. 5. Direct Competitors <br />
  6. 6. Business Units<br />1. PepsiCo Americas Foods*<br />2. PepsiCo Americas Beverages*<br />3. PepsiCo International <br />* Includes Latin American business<br />
  7. 7. PepsiCo 2009<br />Source: Edward Jones<br />
  8. 8. Sales and EPS Growth<br /><ul><li>Compounded sales growth rate: 7.3%
  9. 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. 10. Value Line Projections<br />17% Yr to Yr Gain<br />Baseline Projections<br />28% Yr to Yr Gain<br />
  11. 11. SWOT Analysis<br />
  12. 12. SWOT Analysis<br />
  13. 13. P/E Valuation<br />Average Forward P/E for S&P 500: 14.5 <br />
  14. 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. 15. DCF Data Input<br />
  16. 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. 17. Recommendation: Buy<br />Estimated Value: $71.06-$79.24<br />Current Price: $66.29<br />
  18. 18. Questions from the Board of Directors?<br />
  19. 19. PepsiCo vs. Coca-Cola<br />
  20. 20. Foreign Currency Exposure<br /><ul><li>PepsiCo
  21. 21. Coca-Cola
  22. 22. Generated 74% of net operating revenue from outside U.S.
  23. 23. Uses 72 functional currencies
  24. 24. Currency impact on net revenue
  25. 25. 2009: -11%
  26. 26. Uses derivatives to hedge
  27. 27. Forward contracts
  28. 28. Purchase currency options
  29. 29. Generated 48% of net operating revenue from outside U.S.
  30. 30. Currency impact on net revenue
  31. 31. 2009: -5%
  32. 32. Uses derivatives to hedge
  33. 33. Forward contracts
  34. 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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