Money Tree Portfolio: Investing In Pepsi Co. (PEP)

By | October 1, 2013

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Company Profile: PepsiCo is a global snack and food company that manufactures, markets, and sells a variety of salty and convenient snacks and soft drinks in over 200 countries. Its largest operations are in the United States, Canada, and Mexico along with the UK. PepsiCo is divided up into four business units. Frito-Lay, Quaker Foods, PepsiCo Beverages, and PepsiCo International. Many of PepsiCo’s brand names such as Fritos, Doritos Lay’s Cheetos, Tostitos, SunChips, Quaker Oats, Aunt Jemima, Cap’n Crunch, Pepsi soft drinks, Gatorade, and Mountain Dew are widely recognizable and some are over 100 years old. PepsiCo is large company with at least 18 brands generating over $1 billion in retail sales, with its top two brands being Pepsi-Cola and Mountain Dew. PepsiCo International is experiencing growth with operations in more than 40 countries. With Coco-cola as the #1 beverage brand in the world, PepsiCo is the #1 snack chip company with more than a 25% market share of international retail snack chip sales.


Key Statistics:

Market Cap (intraday)5: 123.10B
Enterprise Value (Oct 1, 2013)3: 145.06B
Trailing P/E (ttm, intraday): 18.8
Forward P/E (fye Dec 29, 2014)1: 16.91
PEG Ratio (5 yr expected)1: 2.22
Price/Sales (ttm): 1.86
Price/Book (mrq): 5.4
Enterprise Value/Revenue (ttm)3: 2.2
Enterprise Value/EBITDA (ttm)6: 11.68

Why Buy?pepsi products

PepsiCo is a solid company with great established brands in the snack food industry. Sales in international markets, once dominated by Coca-Cola, have tripled to $22 billion in five years. As any other global company PepsiCo is subject to unfavorable currency exchanges and rising commodity costs. This has lead to gross earnings to grow at a lower rate. Despite this, the company continues to raise its dividends and plans for further share repurchases. With strategic restructuring and investments in new healthier products, Pepsi is poised for further growth, especially in the international markets. A 10-year compounded earnings per share has growth 10.5%/year with dividend raises every year for the past 10 years.

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