Intrinsic value of PepsiCo - PEP

Previous Close

$113.10

  Intrinsic Value

$101.62

stock screener

  Rating & Target

hold

-10%

Previous close

$113.10

 
Intrinsic value

$101.62

 
Up/down potential

-10%

 
Rating

hold

We calculate the intrinsic value of PEP stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 161.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  64,796
  66,286
  67,989
  69,902
  72,021
  74,346
  76,878
  79,619
  82,572
  85,741
  89,131
  92,748
  96,600
  100,693
  105,037
  109,640
  114,512
  119,665
  125,110
  130,858
  136,924
  143,320
  150,063
  157,167
  164,649
  172,527
  180,819
  189,545
  198,724
  208,380
Variable operating expenses, $m
  10,893
  11,078
  11,289
  11,527
  11,789
  12,078
  12,392
  12,732
  13,098
  13,491
  11,053
  11,501
  11,979
  12,487
  13,025
  13,596
  14,200
  14,839
  15,514
  16,227
  16,979
  17,773
  18,609
  19,490
  20,418
  21,395
  22,423
  23,505
  24,643
  25,840
Fixed operating expenses, $m
  44,298
  45,272
  46,268
  47,286
  48,326
  49,389
  50,476
  51,587
  52,721
  53,881
  55,067
  56,278
  57,516
  58,782
  60,075
  61,396
  62,747
  64,128
  65,538
  66,980
  68,454
  69,960
  71,499
  73,072
  74,679
  76,322
  78,002
  79,718
  81,471
  83,264
Total operating expenses, $m
  55,191
  56,350
  57,557
  58,813
  60,115
  61,467
  62,868
  64,319
  65,819
  67,372
  66,120
  67,779
  69,495
  71,269
  73,100
  74,992
  76,947
  78,967
  81,052
  83,207
  85,433
  87,733
  90,108
  92,562
  95,097
  97,717
  100,425
  103,223
  106,114
  109,104
Operating income, $m
  9,605
  9,936
  10,432
  11,089
  11,906
  12,879
  14,011
  15,301
  16,753
  18,369
  23,011
  24,969
  27,105
  29,425
  31,937
  34,647
  37,565
  40,698
  44,057
  47,651
  51,490
  55,588
  59,955
  64,605
  69,552
  74,810
  80,395
  86,322
  92,610
  99,276
EBITDA, $m
  17,070
  17,507
  18,124
  18,918
  19,884
  21,023
  22,335
  23,820
  25,482
  27,323
  29,349
  31,563
  33,973
  36,584
  39,405
  42,443
  45,707
  49,206
  52,952
  56,955
  61,226
  65,778
  70,625
  75,780
  81,259
  87,077
  93,251
  99,799
  106,739
  114,091
Interest expense (income), $m
  1,102
  2,121
  2,197
  2,284
  2,384
  2,496
  2,620
  2,756
  2,904
  3,064
  3,237
  3,422
  3,620
  3,832
  4,057
  4,296
  4,550
  4,820
  5,105
  5,406
  5,724
  6,060
  6,415
  6,789
  7,183
  7,599
  8,036
  8,497
  8,982
  9,492
  10,029
Earnings before tax, $m
  7,483
  7,738
  8,147
  8,705
  9,410
  10,259
  11,255
  12,397
  13,689
  15,132
  19,589
  21,348
  23,273
  25,368
  27,640
  30,097
  32,745
  35,594
  38,651
  41,926
  45,430
  49,173
  53,166
  57,422
  61,953
  66,774
  71,898
  77,340
  83,118
  89,247
Tax expense, $m
  2,021
  2,089
  2,200
  2,350
  2,541
  2,770
  3,039
  3,347
  3,696
  4,086
  5,289
  5,764
  6,284
  6,849
  7,463
  8,126
  8,841
  9,610
  10,436
  11,320
  12,266
  13,277
  14,355
  15,504
  16,727
  18,029
  19,412
  20,882
  22,442
  24,097
Net income, $m
  5,463
  5,649
  5,948
  6,355
  6,869
  7,489
  8,216
  9,050
  9,993
  11,046
  14,300
  15,584
  16,989
  18,519
  20,177
  21,971
  23,904
  25,983
  28,215
  30,606
  33,164
  35,896
  38,811
  41,918
  45,226
  48,745
  52,485
  56,458
  60,676
  65,150

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  81,401
  83,274
  85,414
  87,816
  90,479
  93,400
  96,581
  100,024
  103,733
  107,715
  111,974
  116,518
  121,357
  126,499
  131,956
  137,739
  143,860
  150,333
  157,173
  164,395
  172,015
  180,051
  188,521
  197,446
  206,846
  216,743
  227,160
  238,122
  249,654
  261,784
Adjusted assets (=assets-cash), $m
  81,401
  83,274
  85,414
  87,816
  90,479
  93,400
  96,581
  100,024
  103,733
  107,715
  111,974
  116,518
  121,357
  126,499
  131,956
  137,739
  143,860
  150,333
  157,173
  164,395
  172,015
  180,051
  188,521
  197,446
  206,846
  216,743
  227,160
  238,122
  249,654
  261,784
Revenue / Adjusted assets
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
  0.796
Average production assets, $m
  46,070
  47,129
  48,340
  49,700
  51,207
  52,860
  54,660
  56,609
  58,709
  60,962
  63,372
  65,944
  68,683
  71,593
  74,681
  77,954
  81,418
  85,082
  88,953
  93,040
  97,353
  101,901
  106,695
  111,746
  117,066
  122,667
  128,562
  134,766
  141,293
  148,158
Working capital, $m
  -12,311
  -12,594
  -12,918
  -13,281
  -13,684
  -14,126
  -14,607
  -15,128
  -15,689
  -16,291
  -16,935
  -17,622
  -18,354
  -19,132
  -19,957
  -20,832
  -21,757
  -22,736
  -23,771
  -24,863
  -26,015
  -27,231
  -28,512
  -29,862
  -31,283
  -32,780
  -34,356
  -36,014
  -37,758
  -39,592
Total debt, $m
  40,690
  42,304
  44,149
  46,220
  48,515
  51,033
  53,775
  56,743
  59,940
  63,372
  67,043
  70,961
  75,131
  79,564
  84,268
  89,253
  94,529
  100,109
  106,005
  112,230
  118,799
  125,726
  133,027
  140,721
  148,823
  157,354
  166,334
  175,783
  185,724
  196,180
Total liabilities, $m
  70,168
  71,782
  73,627
  75,698
  77,993
  80,511
  83,253
  86,221
  89,418
  92,850
  96,521
  100,439
  104,609
  109,042
  113,746
  118,731
  124,007
  129,587
  135,483
  141,708
  148,277
  155,204
  162,505
  170,199
  178,301
  186,832
  195,812
  205,261
  215,202
  225,658
Total equity, $m
  11,233
  11,492
  11,787
  12,119
  12,486
  12,889
  13,328
  13,803
  14,315
  14,865
  15,452
  16,079
  16,747
  17,457
  18,210
  19,008
  19,853
  20,746
  21,690
  22,686
  23,738
  24,847
  26,016
  27,248
  28,545
  29,911
  31,348
  32,861
  34,452
  36,126
Total liabilities and equity, $m
  81,401
  83,274
  85,414
  87,817
  90,479
  93,400
  96,581
  100,024
  103,733
  107,715
  111,973
  116,518
  121,356
  126,499
  131,956
  137,739
  143,860
  150,333
  157,173
  164,394
  172,015
  180,051
  188,521
  197,447
  206,846
  216,743
  227,160
  238,122
  249,654
  261,784
Debt-to-equity ratio
  3.620
  3.680
  3.750
  3.810
  3.890
  3.960
  4.030
  4.110
  4.190
  4.260
  4.340
  4.410
  4.490
  4.560
  4.630
  4.700
  4.760
  4.830
  4.890
  4.950
  5.000
  5.060
  5.110
  5.160
  5.210
  5.260
  5.310
  5.350
  5.390
  5.430
Adjusted equity ratio
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5,463
  5,649
  5,948
  6,355
  6,869
  7,489
  8,216
  9,050
  9,993
  11,046
  14,300
  15,584
  16,989
  18,519
  20,177
  21,971
  23,904
  25,983
  28,215
  30,606
  33,164
  35,896
  38,811
  41,918
  45,226
  48,745
  52,485
  56,458
  60,676
  65,150
Depreciation, amort., depletion, $m
  7,465
  7,571
  7,692
  7,828
  7,979
  8,144
  8,324
  8,519
  8,729
  8,954
  6,337
  6,594
  6,868
  7,159
  7,468
  7,795
  8,142
  8,508
  8,895
  9,304
  9,735
  10,190
  10,669
  11,175
  11,707
  12,267
  12,856
  13,477
  14,129
  14,816
Funds from operations, $m
  12,928
  13,220
  13,640
  14,183
  14,848
  15,634
  16,540
  17,569
  18,722
  20,001
  20,637
  22,179
  23,857
  25,678
  27,646
  29,766
  32,046
  34,492
  37,110
  39,910
  42,899
  46,086
  49,481
  53,093
  56,933
  61,012
  65,342
  69,935
  74,805
  79,966
Change in working capital, $m
  -241
  -283
  -324
  -363
  -403
  -442
  -481
  -521
  -561
  -602
  -644
  -687
  -732
  -778
  -825
  -875
  -926
  -979
  -1,034
  -1,092
  -1,152
  -1,215
  -1,281
  -1,350
  -1,422
  -1,497
  -1,575
  -1,658
  -1,744
  -1,835
Cash from operations, $m
  13,169
  13,503
  13,964
  14,547
  15,251
  16,075
  17,021
  18,090
  19,283
  20,603
  21,282
  22,866
  24,589
  26,456
  28,471
  30,641
  32,972
  35,471
  38,145
  41,002
  44,052
  47,302
  50,762
  54,442
  58,354
  62,508
  66,917
  71,593
  76,549
  81,800
Maintenance CAPEX, $m
  -4,514
  -4,607
  -4,713
  -4,834
  -4,970
  -5,121
  -5,286
  -5,466
  -5,661
  -5,871
  -6,096
  -6,337
  -6,594
  -6,868
  -7,159
  -7,468
  -7,795
  -8,142
  -8,508
  -8,895
  -9,304
  -9,735
  -10,190
  -10,669
  -11,175
  -11,707
  -12,267
  -12,856
  -13,477
  -14,129
New CAPEX, $m
  -932
  -1,060
  -1,211
  -1,360
  -1,507
  -1,653
  -1,800
  -1,949
  -2,099
  -2,253
  -2,410
  -2,572
  -2,738
  -2,910
  -3,088
  -3,273
  -3,464
  -3,664
  -3,871
  -4,087
  -4,313
  -4,548
  -4,794
  -5,051
  -5,320
  -5,601
  -5,896
  -6,204
  -6,527
  -6,865
Cash from investing activities, $m
  -5,446
  -5,667
  -5,924
  -6,194
  -6,477
  -6,774
  -7,086
  -7,415
  -7,760
  -8,124
  -8,506
  -8,909
  -9,332
  -9,778
  -10,247
  -10,741
  -11,259
  -11,806
  -12,379
  -12,982
  -13,617
  -14,283
  -14,984
  -15,720
  -16,495
  -17,308
  -18,163
  -19,060
  -20,004
  -20,994
Free cash flow, $m
  7,724
  7,837
  8,039
  8,353
  8,774
  9,301
  9,935
  10,675
  11,522
  12,479
  12,775
  13,957
  15,256
  16,677
  18,223
  19,900
  21,712
  23,665
  25,766
  28,020
  30,435
  33,018
  35,778
  38,722
  41,860
  45,201
  48,755
  52,533
  56,546
  60,806
Issuance/(repayment) of debt, $m
  1,409
  1,614
  1,845
  2,071
  2,295
  2,518
  2,742
  2,968
  3,198
  3,432
  3,671
  3,917
  4,171
  4,433
  4,704
  4,985
  5,277
  5,580
  5,896
  6,225
  6,569
  6,927
  7,302
  7,693
  8,103
  8,531
  8,979
  9,449
  9,941
  10,456
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1,409
  1,614
  1,845
  2,071
  2,295
  2,518
  2,742
  2,968
  3,198
  3,432
  3,671
  3,917
  4,171
  4,433
  4,704
  4,985
  5,277
  5,580
  5,896
  6,225
  6,569
  6,927
  7,302
  7,693
  8,103
  8,531
  8,979
  9,449
  9,941
  10,456
Total cash flow (excl. dividends), $m
  9,133
  9,451
  9,884
  10,424
  11,069
  11,819
  12,677
  13,643
  14,720
  15,911
  16,446
  17,874
  19,427
  21,110
  22,927
  24,885
  26,988
  29,245
  31,662
  34,245
  37,003
  39,945
  43,079
  46,415
  49,962
  53,732
  57,734
  61,982
  66,487
  71,262
Retained Cash Flow (-), $m
  -188
  -258
  -295
  -332
  -367
  -403
  -439
  -475
  -512
  -549
  -588
  -627
  -668
  -710
  -753
  -798
  -845
  -893
  -944
  -997
  -1,052
  -1,109
  -1,169
  -1,232
  -1,297
  -1,366
  -1,438
  -1,513
  -1,591
  -1,674
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  318
  324
  331
  340
  350
  360
  372
  384
  398
  413
  429
  446
  464
  483
  503
  525
  548
  573
  598
  626
  654
  685
  717
  750
  786
  823
  863
  904
  948
  994
Cash available for distribution, $m
  8,945
  9,192
  9,589
  10,092
  10,701
  11,416
  12,238
  13,168
  14,208
  15,361
  15,858
  17,247
  18,759
  20,400
  22,174
  24,087
  26,144
  28,352
  30,718
  33,248
  35,952
  38,836
  41,910
  45,183
  48,665
  52,366
  56,297
  60,469
  64,895
  69,588
Discount rate, %
  4.90
  5.15
  5.40
  5.67
  5.96
  6.25
  6.57
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
PV of cash for distribution, $m
  8,527
  8,315
  8,189
  8,094
  8,013
  7,933
  7,841
  7,724
  7,574
  7,383
  6,814
  6,566
  6,267
  5,920
  5,529
  5,102
  4,646
  4,174
  3,694
  3,220
  2,760
  2,326
  1,924
  1,562
  1,242
  967
  736
  548
  397
  281
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

PepsiCo, Inc. is a global food and beverage company. The Company's portfolio of brands includes Frito-Lay, Gatorade, Pepsi-Cola, Quaker and Tropicana. The Company operates through six segments: Frito-Lay North America (FLNA), Quaker Foods North America (QFNA), North America Beverages (NAB), Latin America, Europe Sub-Saharan Africa (ESSA), and Asia, Middle East and North Africa (AMENA). The FLNA segment includes its branded food and snack businesses in the United States and Canada. The QFNA segment includes its cereal, rice, pasta and other branded food businesses in the United States and Canada. The NAB segment includes its beverage businesses in the United States and Canada. The Latin America segment includes its beverage, food and snack businesses in Latin America. The ESSA segment includes its beverage, food and snack businesses in Europe and Sub-Saharan Africa. The AMENA segment includes its beverage, food and snack businesses in Asia, Middle East and North Africa.

FINANCIAL RATIOS  of  PepsiCo (PEP)

Valuation Ratios
P/E Ratio 25.5
Price to Sales 2.6
Price to Book 14.6
Price to Tangible Book
Price to Cash Flow 15.5
Price to Free Cash Flow 21.9
Growth Rates
Sales Growth Rate -0.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 10.2%
Cap. Spend. - 3 Yr. Gr. Rate 1.7%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 270.9%
Total Debt to Equity 333%
Interest Coverage 9
Management Effectiveness
Return On Assets 10%
Ret/ On Assets - 3 Yr. Avg. 9.5%
Return On Total Capital 13.6%
Ret/ On T. Cap. - 3 Yr. Avg. 12.8%
Return On Equity 55%
Return On Equity - 3 Yr. Avg. 41.1%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 55.1%
Gross Margin - 3 Yr. Avg. 54.2%
EBITDA Margin 19.1%
EBITDA Margin - 3 Yr. Avg. 18.2%
Operating Margin 15.6%
Oper. Margin - 3 Yr. Avg. 14.4%
Pre-Tax Margin 13.6%
Pre-Tax Margin - 3 Yr. Avg. 12.9%
Net Profit Margin 10.1%
Net Profit Margin - 3 Yr. Avg. 9.5%
Effective Tax Rate 25.4%
Eff/ Tax Rate - 3 Yr. Avg. 25.5%
Payout Ratio 66.8%

PEP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PEP stock intrinsic value calculation we used $63525 million for the last fiscal year's total revenue generated by PepsiCo. The default revenue input number comes from 2017 income statement of PepsiCo. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our PEP stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.9%, whose default value for PEP is calculated based on our internal credit rating of PepsiCo, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of PepsiCo.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of PEP stock the variable cost ratio is equal to 16.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $43344 million in the base year in the intrinsic value calculation for PEP stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for PepsiCo.

Corporate tax rate of 27% is the nominal tax rate for PepsiCo. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the PEP stock is equal to 0.5%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for PEP are equal to 71.1%.

Life of production assets of 10 years is the average useful life of capital assets used in PepsiCo operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for PEP is equal to -19%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $11045 million for PepsiCo - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1425 million for PepsiCo is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of PepsiCo at the current share price and the inputted number of shares is $161.2 billion.

RELATED COMPANIES Price Int.Val. Rating
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FIZZ National Bever 113.55 170.84  str.buy

COMPANY NEWS

▶ [$$] Coca-Cola Invests in BodyArmor as It Chases Gatorade   [Aug-14-18 08:43PM  The Wall Street Journal]
▶ [$$] Coke Invests in BodyArmor as It Chases Gatorade   [05:43PM  The Wall Street Journal]
▶ Coca-Cola's new plan to take on PepsiCos Gatorade   [10:57AM  Yahoo Finance Video]
▶ Maryland football has a huge problem but it might not last   [Aug-13-18 03:01PM  American City Business Journals]
▶ PepsiCo Investors Should Be Happy CEO Indra Nooyi Is Out   [Aug-12-18 05:10PM  Motley Fool]
▶ Reflecting on the Tenure of PepsiCo CEO Indra Nooyi   [Aug-10-18 10:58PM  Motley Fool]
▶ [$$] How Should Pepsis Indra Nooyi Be Graded?   [07:49PM  The Wall Street Journal]
▶ Giants dive into the science of sweat to keep players hydrated   [02:17PM  American City Business Journals]
▶ Coca-Cola may be looking to take a bite out of the food market   [Aug-09-18 03:01PM  American City Business Journals]
▶ Pepsi CEO departure leaves 24 female CEOs in S&P 500   [Aug-07-18 07:21PM  CBS News Videos]
▶ PepsiCo Falls 3.06% in Earnings Season   [12:54PM  Investing.com]
▶ With Indra Nooyi's departure, the number of women CEOs keeps shrinking   [10:27AM  American City Business Journals]
▶ [$$] Meet PepsiCos Next CEO: Ramon Laguarta   [03:54AM  The Wall Street Journal]
▶ [$$] Women CEOs and the hard path to the board   [01:58AM  Financial Times]
▶ PRESS DIGEST- Financial Times - Aug 7   [Aug-06-18 08:10PM  Reuters]
▶ Business Highlights   [05:36PM  Associated Press]
▶ PepsiCo's Incoming CEO Faces Key Issues   [03:35PM  TheStreet.com]
▶ [$$] Pepsi CEO Nooyi to Step Down; Veteran Set to Take Helm   [03:19PM  The Wall Street Journal]
▶ 3 Things to Know About Pepsi's CEO Swap   [01:31PM  Barrons.com]
▶ The Best Thing PepsiCo Has Going for It Now   [11:22AM  TheStreet.com]
▶ PepsiCo CEO Indra Nooyi to step down in October   [11:12AM  American City Business Journals]
▶ How Will Pepsi React to a New CEO?   [10:55AM  TheStreet.com]
▶ Top 5 Shareholders of PepsiCo (PEP)   [10:21AM  Investopedia]
▶ Pepsi's First Female CEO to Step Down   [09:38AM  Bloomberg]
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