Report
Valens Research

PEP - Embedded Expectations Analysis - 2021 05 12

PepsiCo, Inc. (PEP:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 35.7x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about China and U.S. tea market share, 2022 gross margins, and Frito-Lay pricing execution

Specifically, management may lack confidence in their ability to sustain share gains in China and the U.S. tea market, adapt to China's changing consumption trends, and execute their pricing strategies for Frito-Lay. Furthermore, they may have concerns about 2022 gross margins, the pace of recovery of their supply chain, and persisting pandemic-related costs. Finally, management may lack confidence in their ability to focus on the energy drink business, mitigate inflationary pressures, and compete through innovation and brand building
Underlying
PepsiCo Inc.

PepsiCo is a food and beverage company. The company's segments include: Frito-Lay North America, which includes food and snack businesses in the United States and Canada; Quaker Foods North America, which includes cereal, rice, pasta and other food businesses in the United States and Canada; PepsiCo Beverages North America, which includes beverage businesses in the United States and Canada; Latin America, which includes beverage, food and snack businesses in Latin America; Europe, which includes beverage, food and snack businesses in Europe; and Africa, Middle East and South Asia, which includes beverage, food and snack businesses in Africa, the Middle East and South Asia.

Provider
Valens Research
Valens Research

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