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PEP - Embedded Expectations Analysis - 2021 08 04

PepsiCo, Inc. (PEP:USA) currently trades at a historical high relative to UAFRS-based
(Uniform) earnings, with a 36.7x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about brand growth, inflation, and the margin impact of acquisitions.

Specifically, management may lack confidence in their ability to sustain growth in their
small-and-medium-sized brands such as Starbucks and Pure Leaf, expand the away-from-home business in China, and gain market share in the U.S. In addition, they may have concerns about the margin impact of new acquisitions and the sustainability of at home consumption trends. Finally, management may be exaggerating the potential of their customer interaction investments and they may lack confidence in their ability to navigate inflation headwinds.
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.

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