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PepsiCo powerpoint

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Created 4/29/10

Created 4/29/10


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  • 1. PepsiCo (PEP)
    Brad Schwer
  • 2. Recommendation: Buy
    Estimated Value: $71.06-$79.04
    Current Stock Price: $66.29
    Sector: Consumer StaplesIndustry: Soft Drinks
  • 3. 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
  • 4. Familiar Products
    Pepsi/Diet Pepsi
    Mountain Dew
    Aquafina (bottled water)
    7UP
    SoBeLifewater
    Tropicana
    Lays, Doritos, Ruffles
    Quaker oatmeal/Rice-A-Roni
  • 5. Direct Competitors
  • 6. Business Units
    1. PepsiCo Americas Foods*
    2. PepsiCo Americas Beverages*
    3. PepsiCo International
    * Includes Latin American business
  • 7. PepsiCo 2009
    Source: Edward Jones
  • 8. Sales and EPS Growth
    • Compounded sales growth rate: 7.3%
    • 9. Compounded Baseline EPS growth rate: 8.7%
  • Value Line Projections
    12% Yr to Yr Gain
    Baseline Projections
    12% Yr to Yr Gain
  • 10. Value Line Projections
    17% Yr to Yr Gain
    Baseline Projections
    28% Yr to Yr Gain
  • 11. SWOT Analysis
  • 12. SWOT Analysis
  • 13. P/E Valuation
    Average Forward P/E for S&P 500: 14.5
  • 14. 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
  • 15. DCF Data Input
  • 16. Valuation
    DCF intrinsic value: $79.24
    P/E valuation: $71.06
    Valuation range
    $71.06-$79.24
    Current Stock Price
    $66.29 (Undervalued)
  • 17. Recommendation: Buy
    Estimated Value: $71.06-$79.24
    Current Price: $66.29
  • 18. Questions from the Board of Directors?
  • 19. PepsiCo vs. Coca-Cola
  • 20. Foreign Currency Exposure
    • 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
  • 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