Intrinsic value of Pepsico, Inc. - PEP

Previous Close

$117.27

  Intrinsic Value

$79.60

stock screener

  Rating & Target

sell

-32%

Previous close

$117.27

 
Intrinsic value

$79.60

 
Up/down potential

-32%

 
Rating

sell

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 164.7

 

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, %
  2.00
  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
  65,954
  67,471
  69,205
  71,152
  73,309
  75,676
  78,253
  81,043
  84,048
  87,274
  90,725
  94,407
  98,327
  102,494
  106,915
  111,601
  116,560
  121,805
  127,347
  133,198
  139,372
  145,883
  152,747
  159,978
  167,594
  175,613
  184,053
  192,934
  202,278
  212,106
Variable operating expenses, $m
  55,208
  56,408
  57,779
  59,318
  61,023
  62,895
  64,932
  67,138
  69,514
  72,064
  71,729
  74,641
  77,740
  81,034
  84,530
  88,234
  92,155
  96,302
  100,684
  105,310
  110,191
  115,339
  120,765
  126,482
  132,504
  138,844
  145,517
  152,539
  159,926
  167,697
Fixed operating expenses, $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 operating expenses, $m
  55,208
  56,408
  57,779
  59,318
  61,023
  62,895
  64,932
  67,138
  69,514
  72,064
  71,729
  74,641
  77,740
  81,034
  84,530
  88,234
  92,155
  96,302
  100,684
  105,310
  110,191
  115,339
  120,765
  126,482
  132,504
  138,844
  145,517
  152,539
  159,926
  167,697
Operating income, $m
  10,746
  11,063
  11,427
  11,834
  12,286
  12,781
  13,321
  13,905
  14,534
  15,210
  18,995
  19,766
  20,587
  21,460
  22,385
  23,366
  24,405
  25,503
  26,663
  27,888
  29,181
  30,544
  31,981
  33,495
  35,090
  36,769
  38,536
  40,396
  42,352
  44,410
EBITDA, $m
  15,485
  15,841
  16,248
  16,705
  17,212
  17,767
  18,372
  19,027
  19,733
  20,490
  21,301
  22,165
  23,086
  24,064
  25,102
  26,202
  27,366
  28,598
  29,899
  31,273
  32,722
  34,251
  35,862
  37,560
  39,348
  41,231
  43,212
  45,298
  47,491
  49,799
Interest expense (income), $m
  1,102
  1,745
  1,812
  1,892
  1,984
  2,086
  2,200
  2,325
  2,461
  2,608
  2,766
  2,936
  3,118
  3,312
  3,519
  3,738
  3,971
  4,218
  4,479
  4,756
  5,048
  5,356
  5,682
  6,025
  6,387
  6,768
  7,169
  7,592
  8,037
  8,505
  8,997
Earnings before tax, $m
  9,001
  9,251
  9,534
  9,850
  10,199
  10,581
  10,996
  11,445
  11,927
  12,444
  16,060
  16,649
  17,275
  17,941
  18,647
  19,395
  20,187
  21,023
  21,907
  22,840
  23,825
  24,863
  25,956
  27,109
  28,322
  29,600
  30,944
  32,359
  33,847
  35,413
Tax expense, $m
  2,430
  2,498
  2,574
  2,660
  2,754
  2,857
  2,969
  3,090
  3,220
  3,360
  4,336
  4,495
  4,664
  4,844
  5,035
  5,237
  5,450
  5,676
  5,915
  6,167
  6,433
  6,713
  7,008
  7,319
  7,647
  7,992
  8,355
  8,737
  9,139
  9,561
Net income, $m
  6,570
  6,753
  6,960
  7,191
  7,446
  7,724
  8,027
  8,354
  8,707
  9,084
  11,723
  12,153
  12,611
  13,097
  13,612
  14,159
  14,736
  15,347
  15,992
  16,673
  17,392
  18,150
  18,948
  19,789
  20,675
  21,608
  22,589
  23,622
  24,709
  25,851

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
  79,177
  80,998
  83,079
  85,416
  88,006
  90,847
  93,941
  97,290
  100,899
  104,771
  108,913
  113,334
  118,040
  123,042
  128,350
  133,974
  139,928
  146,225
  152,877
  159,902
  167,314
  175,130
  183,369
  192,050
  201,193
  210,819
  220,952
  231,614
  242,831
  254,629
Adjusted assets (=assets-cash), $m
  79,177
  80,998
  83,079
  85,416
  88,006
  90,847
  93,941
  97,290
  100,899
  104,771
  108,913
  113,334
  118,040
  123,042
  128,350
  133,974
  139,928
  146,225
  152,877
  159,902
  167,314
  175,130
  183,369
  192,050
  201,193
  210,819
  220,952
  231,614
  242,831
  254,629
Revenue / Adjusted assets
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
  0.833
Average production assets, $m
  32,845
  33,601
  34,464
  35,434
  36,508
  37,687
  38,970
  40,359
  41,856
  43,462
  45,181
  47,015
  48,967
  51,042
  53,244
  55,577
  58,047
  60,659
  63,419
  66,333
  69,407
  72,650
  76,068
  79,669
  83,462
  87,455
  91,658
  96,081
  100,735
  105,629
Working capital, $m
  -7,321
  -7,489
  -7,682
  -7,898
  -8,137
  -8,400
  -8,686
  -8,996
  -9,329
  -9,687
  -10,070
  -10,479
  -10,914
  -11,377
  -11,868
  -12,388
  -12,938
  -13,520
  -14,136
  -14,785
  -15,470
  -16,193
  -16,955
  -17,758
  -18,603
  -19,493
  -20,430
  -21,416
  -22,453
  -23,544
Total debt, $m
  33,562
  35,042
  36,735
  38,635
  40,740
  43,050
  45,565
  48,288
  51,222
  54,370
  57,738
  61,331
  65,158
  69,224
  73,539
  78,112
  82,953
  88,072
  93,480
  99,191
  105,217
  111,572
  118,270
  125,328
  132,761
  140,587
  148,825
  157,493
  166,613
  176,205
Total liabilities, $m
  64,371
  65,851
  67,544
  69,444
  71,549
  73,859
  76,374
  79,097
  82,031
  85,179
  88,547
  92,140
  95,967
  100,033
  104,348
  108,921
  113,762
  118,881
  124,289
  130,000
  136,026
  142,381
  149,079
  156,137
  163,570
  171,396
  179,634
  188,302
  197,422
  207,014
Total equity, $m
  14,806
  15,147
  15,536
  15,973
  16,457
  16,988
  17,567
  18,193
  18,868
  19,592
  20,367
  21,193
  22,073
  23,009
  24,001
  25,053
  26,167
  27,344
  28,588
  29,902
  31,288
  32,749
  34,290
  35,913
  37,623
  39,423
  41,318
  43,312
  45,409
  47,616
Total liabilities and equity, $m
  79,177
  80,998
  83,080
  85,417
  88,006
  90,847
  93,941
  97,290
  100,899
  104,771
  108,914
  113,333
  118,040
  123,042
  128,349
  133,974
  139,929
  146,225
  152,877
  159,902
  167,314
  175,130
  183,369
  192,050
  201,193
  210,819
  220,952
  231,614
  242,831
  254,630
Debt-to-equity ratio
  2.270
  2.310
  2.360
  2.420
  2.480
  2.530
  2.590
  2.650
  2.710
  2.780
  2.830
  2.890
  2.950
  3.010
  3.060
  3.120
  3.170
  3.220
  3.270
  3.320
  3.360
  3.410
  3.450
  3.490
  3.530
  3.570
  3.600
  3.640
  3.670
  3.700
Adjusted equity ratio
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187
  0.187

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  6,570
  6,753
  6,960
  7,191
  7,446
  7,724
  8,027
  8,354
  8,707
  9,084
  11,723
  12,153
  12,611
  13,097
  13,612
  14,159
  14,736
  15,347
  15,992
  16,673
  17,392
  18,150
  18,948
  19,789
  20,675
  21,608
  22,589
  23,622
  24,709
  25,851
Depreciation, amort., depletion, $m
  4,739
  4,778
  4,822
  4,871
  4,926
  4,986
  5,052
  5,122
  5,199
  5,281
  2,305
  2,399
  2,498
  2,604
  2,717
  2,836
  2,962
  3,095
  3,236
  3,384
  3,541
  3,707
  3,881
  4,065
  4,258
  4,462
  4,676
  4,902
  5,140
  5,389
Funds from operations, $m
  11,309
  11,531
  11,782
  12,062
  12,372
  12,710
  13,079
  13,477
  13,905
  14,365
  14,029
  14,552
  15,109
  15,701
  16,329
  16,994
  17,698
  18,442
  19,228
  20,058
  20,933
  21,856
  22,829
  23,854
  24,933
  26,070
  27,266
  28,524
  29,848
  31,240
Change in working capital, $m
  -144
  -168
  -192
  -216
  -239
  -263
  -286
  -310
  -334
  -358
  -383
  -409
  -435
  -462
  -491
  -520
  -551
  -582
  -615
  -649
  -685
  -723
  -762
  -803
  -845
  -890
  -937
  -986
  -1,037
  -1,091
Cash from operations, $m
  11,453
  11,699
  11,974
  12,278
  12,611
  12,973
  13,365
  13,787
  14,239
  14,723
  14,412
  14,961
  15,545
  16,164
  16,820
  17,514
  18,248
  19,024
  19,843
  20,707
  21,619
  22,579
  23,591
  24,657
  25,779
  26,960
  28,203
  29,510
  30,885
  32,331
Maintenance CAPEX, $m
  -1,644
  -1,676
  -1,714
  -1,758
  -1,808
  -1,863
  -1,923
  -1,988
  -2,059
  -2,136
  -2,217
  -2,305
  -2,399
  -2,498
  -2,604
  -2,717
  -2,836
  -2,962
  -3,095
  -3,236
  -3,384
  -3,541
  -3,707
  -3,881
  -4,065
  -4,258
  -4,462
  -4,676
  -4,902
  -5,140
New CAPEX, $m
  -627
  -755
  -864
  -969
  -1,074
  -1,179
  -1,283
  -1,389
  -1,497
  -1,606
  -1,718
  -1,834
  -1,952
  -2,075
  -2,202
  -2,333
  -2,470
  -2,612
  -2,760
  -2,914
  -3,075
  -3,243
  -3,418
  -3,601
  -3,793
  -3,993
  -4,203
  -4,423
  -4,653
  -4,894
Cash from investing activities, $m
  -2,271
  -2,431
  -2,578
  -2,727
  -2,882
  -3,042
  -3,206
  -3,377
  -3,556
  -3,742
  -3,935
  -4,139
  -4,351
  -4,573
  -4,806
  -5,050
  -5,306
  -5,574
  -5,855
  -6,150
  -6,459
  -6,784
  -7,125
  -7,482
  -7,858
  -8,251
  -8,665
  -9,099
  -9,555
  -10,034
Free cash flow, $m
  9,182
  9,268
  9,396
  9,550
  9,729
  9,932
  10,159
  10,409
  10,683
  10,981
  10,476
  10,822
  11,193
  11,590
  12,014
  12,464
  12,943
  13,451
  13,989
  14,558
  15,160
  15,795
  16,466
  17,175
  17,921
  18,708
  19,537
  20,411
  21,330
  22,297
Issuance/(repayment) of debt, $m
  1,241
  1,481
  1,692
  1,900
  2,105
  2,310
  2,515
  2,723
  2,933
  3,148
  3,368
  3,594
  3,826
  4,067
  4,315
  4,573
  4,841
  5,119
  5,409
  5,711
  6,026
  6,355
  6,698
  7,058
  7,433
  7,826
  8,238
  8,668
  9,119
  9,592
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  
  1,241
  1,481
  1,692
  1,900
  2,105
  2,310
  2,515
  2,723
  2,933
  3,148
  3,368
  3,594
  3,826
  4,067
  4,315
  4,573
  4,841
  5,119
  5,409
  5,711
  6,026
  6,355
  6,698
  7,058
  7,433
  7,826
  8,238
  8,668
  9,119
  9,592
Total cash flow (excl. dividends), $m
  10,423
  10,749
  11,089
  11,450
  11,834
  12,242
  12,674
  13,132
  13,616
  14,129
  13,844
  14,416
  15,020
  15,657
  16,329
  17,037
  17,783
  18,570
  19,397
  20,268
  21,185
  22,150
  23,165
  24,232
  25,355
  26,535
  27,775
  29,079
  30,449
  31,890
Retained Cash Flow (-), $m
  -288
  -341
  -389
  -437
  -484
  -531
  -579
  -626
  -675
  -724
  -775
  -827
  -880
  -935
  -993
  -1,052
  -1,113
  -1,177
  -1,244
  -1,314
  -1,386
  -1,462
  -1,541
  -1,623
  -1,710
  -1,800
  -1,895
  -1,994
  -2,098
  -2,206
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
  10,135
  10,408
  10,699
  11,013
  11,350
  11,711
  12,095
  12,506
  12,942
  13,405
  13,069
  13,589
  14,140
  14,722
  15,336
  15,985
  16,670
  17,392
  18,153
  18,955
  19,799
  20,688
  21,624
  22,609
  23,645
  24,734
  25,880
  27,085
  28,352
  29,683
Discount rate, %
  5.70
  5.99
  6.28
  6.60
  6.93
  7.27
  7.64
  8.02
  8.42
  8.84
  9.28
  9.75
  10.24
  10.75
  11.29
  11.85
  12.44
  13.06
  13.72
  14.40
  15.12
  15.88
  16.67
  17.51
  18.38
  19.30
  20.27
  21.28
  22.34
  23.46
PV of cash for distribution, $m
  9,588
  9,266
  8,912
  8,529
  8,120
  7,684
  7,225
  6,746
  6,251
  5,745
  4,921
  4,450
  3,983
  3,526
  3,084
  2,664
  2,271
  1,908
  1,578
  1,285
  1,028
  808
  623
  471
  348
  251
  177
  122
  82
  53
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, Inc. (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 22.7
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 $64661 million for the last fiscal year's total revenue generated by Pepsico, Inc.. The default revenue input number comes from 0001 income statement of Pepsico, Inc.. 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 5.7%, whose default value for PEP is calculated based on our internal credit rating of Pepsico, Inc., 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, Inc..
    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 83.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 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, Inc..

Corporate tax rate of 27% is the nominal tax rate for Pepsico, Inc.. 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 49.8%.

Life of production assets of 19.6 years is the average useful life of capital assets used in Pepsico, Inc. 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 -11.1%. 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 - $14518 million for Pepsico, Inc. - 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 1404.288 million for Pepsico, Inc. 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, Inc. at the current share price and the inputted number of shares is $164.7 billion.

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