Intrinsic value of PepsiCo - PEP

Previous Close

$117.48

  Intrinsic Value

$107.78

stock screener

  Rating & Target

hold

-8%

Previous close

$117.48

 
Intrinsic value

$107.78

 
Up/down potential

-8%

 
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 0001), $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 166.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.40
  2.66
  2.89
  3.10
  3.29
  3.46
  3.62
  3.76
  3.88
  3.99
  4.09
  4.18
  4.27
  4.34
  4.41
  4.46
  4.52
  4.57
  4.61
  4.65
  4.68
  4.72
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
Revenue, $m
  65,050
  66,780
  68,713
  70,846
  73,180
  75,715
  78,455
  81,402
  84,561
  87,937
  91,537
  95,367
  99,435
  103,749
  108,320
  113,156
  118,268
  123,669
  129,370
  135,384
  141,725
  148,408
  155,449
  162,863
  170,668
  178,883
  187,527
  196,619
  206,183
  216,240
Variable operating expenses, $m
  10,925
  11,139
  11,379
  11,644
  11,933
  12,247
  12,587
  12,953
  13,344
  13,763
  11,351
  11,826
  12,331
  12,866
  13,432
  14,032
  14,666
  15,336
  16,043
  16,788
  17,575
  18,404
  19,277
  20,196
  21,164
  22,183
  23,255
  24,382
  25,568
  26,815
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
  55,223
  56,411
  57,647
  58,930
  60,259
  61,636
  63,063
  64,540
  66,065
  67,644
  66,418
  68,104
  69,847
  71,648
  73,507
  75,428
  77,413
  79,464
  81,581
  83,768
  86,029
  88,364
  90,776
  93,268
  95,843
  98,505
  101,257
  104,100
  107,039
  110,079
Operating income, $m
  9,827
  10,368
  11,065
  11,916
  12,920
  14,078
  15,391
  16,863
  18,495
  20,293
  25,119
  27,262
  29,588
  32,102
  34,812
  37,727
  40,855
  44,205
  47,789
  51,615
  55,696
  60,045
  64,673
  69,595
  74,825
  80,378
  86,271
  92,520
  99,143
  106,161
EBITDA, $m
  14,347
  14,933
  15,679
  16,585
  17,648
  18,871
  20,254
  21,801
  23,514
  25,398
  27,457
  29,699
  32,128
  34,753
  37,580
  40,618
  43,877
  47,365
  51,094
  55,074
  59,317
  63,836
  68,645
  73,756
  79,185
  84,948
  91,062
  97,543
  104,411
  111,686
Interest expense (income), $m
  1,102
  2,121
  2,201
  2,295
  2,401
  2,517
  2,645
  2,783
  2,933
  3,093
  3,266
  3,450
  3,646
  3,856
  4,078
  4,313
  4,562
  4,826
  5,105
  5,400
  5,711
  6,039
  6,386
  6,750
  7,135
  7,539
  7,965
  8,413
  8,885
  9,381
  9,903
Earnings before tax, $m
  7,706
  8,168
  8,770
  9,515
  10,403
  11,434
  12,608
  13,930
  15,402
  17,027
  21,669
  23,616
  25,732
  28,024
  30,499
  33,165
  36,029
  39,100
  42,388
  45,904
  49,657
  53,659
  57,923
  62,460
  67,285
  72,413
  77,857
  83,635
  89,762
  96,257
Tax expense, $m
  2,081
  2,205
  2,368
  2,569
  2,809
  3,087
  3,404
  3,761
  4,158
  4,597
  5,851
  6,376
  6,948
  7,567
  8,235
  8,954
  9,728
  10,557
  11,445
  12,394
  13,407
  14,488
  15,639
  16,864
  18,167
  19,551
  21,021
  22,581
  24,236
  25,989
Net income, $m
  5,625
  5,962
  6,402
  6,946
  7,594
  8,346
  9,204
  10,169
  11,243
  12,430
  15,818
  17,240
  18,785
  20,458
  22,265
  24,210
  26,301
  28,543
  30,944
  33,510
  36,250
  39,171
  42,284
  45,596
  49,118
  52,861
  56,836
  61,053
  65,526
  70,268

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
  77,073
  79,123
  81,413
  83,940
  86,706
  89,710
  92,956
  96,447
  100,190
  104,191
  108,456
  112,994
  117,814
  122,926
  128,341
  134,071
  140,128
  146,527
  153,282
  160,407
  167,921
  175,839
  184,181
  192,965
  202,213
  211,947
  222,188
  232,961
  244,292
  256,208
Adjusted assets (=assets-cash), $m
  77,073
  79,123
  81,413
  83,940
  86,706
  89,710
  92,956
  96,447
  100,190
  104,191
  108,456
  112,994
  117,814
  122,926
  128,341
  134,071
  140,128
  146,527
  153,282
  160,407
  167,921
  175,839
  184,181
  192,965
  202,213
  211,947
  222,188
  232,961
  244,292
  256,208
Revenue / Adjusted assets
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
  0.844
Average production assets, $m
  31,744
  32,589
  33,532
  34,573
  35,712
  36,949
  38,286
  39,724
  41,266
  42,913
  44,670
  46,539
  48,524
  50,630
  52,860
  55,220
  57,715
  60,350
  63,132
  66,067
  69,162
  72,423
  75,859
  79,477
  83,286
  87,295
  91,513
  95,950
  100,617
  105,525
Working capital, $m
  -3,578
  -3,673
  -3,779
  -3,897
  -4,025
  -4,164
  -4,315
  -4,477
  -4,651
  -4,837
  -5,035
  -5,245
  -5,469
  -5,706
  -5,958
  -6,224
  -6,505
  -6,802
  -7,115
  -7,446
  -7,795
  -8,162
  -8,550
  -8,957
  -9,387
  -9,839
  -10,314
  -10,814
  -11,340
  -11,893
Total debt, $m
  40,758
  42,507
  44,460
  46,616
  48,975
  51,537
  54,306
  57,285
  60,477
  63,890
  67,528
  71,399
  75,510
  79,871
  84,490
  89,377
  94,544
  100,003
  105,764
  111,842
  118,251
  125,006
  132,121
  139,614
  147,503
  155,806
  164,541
  173,731
  183,397
  193,560
Total liabilities, $m
  65,743
  67,492
  69,445
  71,601
  73,960
  76,522
  79,291
  82,270
  85,462
  88,875
  92,513
  96,384
  100,495
  104,856
  109,475
  114,362
  119,529
  124,988
  130,749
  136,827
  143,236
  149,991
  157,106
  164,599
  172,488
  180,791
  189,526
  198,716
  208,382
  218,545
Total equity, $m
  11,330
  11,631
  11,968
  12,339
  12,746
  13,187
  13,664
  14,178
  14,728
  15,316
  15,943
  16,610
  17,319
  18,070
  18,866
  19,708
  20,599
  21,539
  22,532
  23,580
  24,684
  25,848
  27,075
  28,366
  29,725
  31,156
  32,662
  34,245
  35,911
  37,663
Total liabilities and equity, $m
  77,073
  79,123
  81,413
  83,940
  86,706
  89,709
  92,955
  96,448
  100,190
  104,191
  108,456
  112,994
  117,814
  122,926
  128,341
  134,070
  140,128
  146,527
  153,281
  160,407
  167,920
  175,839
  184,181
  192,965
  202,213
  211,947
  222,188
  232,961
  244,293
  256,208
Debt-to-equity ratio
  3.600
  3.650
  3.720
  3.780
  3.840
  3.910
  3.970
  4.040
  4.110
  4.170
  4.240
  4.300
  4.360
  4.420
  4.480
  4.530
  4.590
  4.640
  4.690
  4.740
  4.790
  4.840
  4.880
  4.920
  4.960
  5.000
  5.040
  5.070
  5.110
  5.140
Adjusted equity ratio
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147
  0.147

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5,625
  5,962
  6,402
  6,946
  7,594
  8,346
  9,204
  10,169
  11,243
  12,430
  15,818
  17,240
  18,785
  20,458
  22,265
  24,210
  26,301
  28,543
  30,944
  33,510
  36,250
  39,171
  42,284
  45,596
  49,118
  52,861
  56,836
  61,053
  65,526
  70,268
Depreciation, amort., depletion, $m
  4,520
  4,564
  4,614
  4,668
  4,728
  4,793
  4,863
  4,938
  5,019
  5,105
  2,339
  2,437
  2,541
  2,651
  2,768
  2,891
  3,022
  3,160
  3,305
  3,459
  3,621
  3,792
  3,972
  4,161
  4,361
  4,570
  4,791
  5,024
  5,268
  5,525
Funds from operations, $m
  10,146
  10,527
  11,016
  11,615
  12,322
  13,139
  14,067
  15,107
  16,262
  17,535
  18,157
  19,676
  21,325
  23,109
  25,032
  27,101
  29,323
  31,703
  34,249
  36,969
  39,871
  42,963
  46,255
  49,757
  53,479
  57,432
  61,627
  66,077
  70,794
  75,793
Change in working capital, $m
  -84
  -95
  -106
  -117
  -128
  -139
  -151
  -162
  -174
  -186
  -198
  -211
  -224
  -237
  -251
  -266
  -281
  -297
  -314
  -331
  -349
  -368
  -387
  -408
  -429
  -452
  -475
  -500
  -526
  -553
Cash from operations, $m
  10,229
  10,622
  11,122
  11,732
  12,450
  13,279
  14,218
  15,269
  16,436
  17,720
  18,355
  19,887
  21,549
  23,346
  25,283
  27,367
  29,604
  32,000
  34,562
  37,300
  40,219
  43,331
  46,642
  50,165
  53,908
  57,883
  62,102
  66,577
  71,320
  76,346
Maintenance CAPEX, $m
  -1,624
  -1,662
  -1,706
  -1,756
  -1,810
  -1,870
  -1,934
  -2,004
  -2,080
  -2,161
  -2,247
  -2,339
  -2,437
  -2,541
  -2,651
  -2,768
  -2,891
  -3,022
  -3,160
  -3,305
  -3,459
  -3,621
  -3,792
  -3,972
  -4,161
  -4,361
  -4,570
  -4,791
  -5,024
  -5,268
New CAPEX, $m
  -717
  -844
  -943
  -1,041
  -1,139
  -1,237
  -1,337
  -1,438
  -1,542
  -1,648
  -1,757
  -1,869
  -1,985
  -2,106
  -2,230
  -2,360
  -2,495
  -2,635
  -2,782
  -2,935
  -3,095
  -3,261
  -3,436
  -3,618
  -3,809
  -4,009
  -4,218
  -4,437
  -4,667
  -4,908
Cash from investing activities, $m
  -2,341
  -2,506
  -2,649
  -2,797
  -2,949
  -3,107
  -3,271
  -3,442
  -3,622
  -3,809
  -4,004
  -4,208
  -4,422
  -4,647
  -4,881
  -5,128
  -5,386
  -5,657
  -5,942
  -6,240
  -6,554
  -6,882
  -7,228
  -7,590
  -7,970
  -8,370
  -8,788
  -9,228
  -9,691
  -10,176
Free cash flow, $m
  7,888
  8,115
  8,473
  8,935
  9,502
  10,172
  10,946
  11,826
  12,814
  13,912
  14,351
  15,679
  17,127
  18,700
  20,402
  22,240
  24,218
  26,343
  28,621
  31,059
  33,666
  36,448
  39,415
  42,575
  45,938
  49,514
  53,314
  57,348
  61,630
  66,170
Issuance/(repayment) of debt, $m
  1,477
  1,749
  1,953
  2,156
  2,359
  2,563
  2,769
  2,979
  3,193
  3,412
  3,638
  3,871
  4,111
  4,361
  4,619
  4,888
  5,167
  5,458
  5,762
  6,078
  6,409
  6,754
  7,115
  7,493
  7,889
  8,302
  8,736
  9,190
  9,665
  10,164
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  
  1,477
  1,749
  1,953
  2,156
  2,359
  2,563
  2,769
  2,979
  3,193
  3,412
  3,638
  3,871
  4,111
  4,361
  4,619
  4,888
  5,167
  5,458
  5,762
  6,078
  6,409
  6,754
  7,115
  7,493
  7,889
  8,302
  8,736
  9,190
  9,665
  10,164
Total cash flow (excl. dividends), $m
  9,365
  9,864
  10,426
  11,091
  11,860
  12,734
  13,715
  14,805
  16,007
  17,324
  17,990
  19,550
  21,238
  23,060
  25,021
  27,127
  29,385
  31,801
  34,382
  37,138
  40,075
  43,202
  46,530
  50,068
  53,827
  57,817
  62,050
  66,538
  71,295
  76,334
Retained Cash Flow (-), $m
  -285
  -301
  -337
  -372
  -406
  -442
  -477
  -513
  -550
  -588
  -627
  -667
  -709
  -751
  -796
  -842
  -890
  -941
  -993
  -1,047
  -1,104
  -1,164
  -1,226
  -1,291
  -1,359
  -1,431
  -1,505
  -1,584
  -1,666
  -1,752
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
  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 available for distribution, $m
  9,080
  9,563
  10,089
  10,720
  11,454
  12,293
  13,238
  14,292
  15,457
  16,736
  17,363
  18,883
  20,530
  22,309
  24,225
  26,285
  28,494
  30,860
  33,389
  36,090
  38,970
  42,038
  45,304
  48,777
  52,467
  56,386
  60,544
  64,954
  69,629
  74,583
Discount rate, %
  5.00
  5.25
  5.51
  5.79
  6.08
  6.38
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.13
  16.93
  17.78
  18.67
  19.60
  20.58
PV of cash for distribution, $m
  8,648
  8,633
  8,589
  8,559
  8,528
  8,481
  8,407
  8,296
  8,138
  7,929
  7,338
  7,054
  6,713
  6,319
  5,879
  5,402
  4,897
  4,378
  3,855
  3,341
  2,848
  2,386
  1,962
  1,582
  1,249
  966
  730
  539
  388
  272
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 26.5
Price to Sales 2.7
Price to Book 15.1
Price to Tangible Book
Price to Cash Flow 16.1
Price to Free Cash Flow 22.8
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 0001 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 2.4% 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 5%, 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%.

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 48.8%.

Life of production assets of 19.1 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 -5.5%. 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 1417.85 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 $166.6 billion.

RELATED COMPANIES Price Int.Val. Rating
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