2024-07-07 03:11:17 ET
Summary
- PepsiCo has underperformed due to cyclical vulnerabilities, but remains attractively priced and has strong cash management.
- Despite challenges, PEP has grown net revenue and free cash flow, with potential for dividend growth as conditions improve.
- PEP's valuation suggests upside potential, with a discounted cash flow indicating a fair value of about $188 per share.
- The cooling of inflation and future interest rate cuts should provide relief to consumers. This may serve as a catalyst to higher sales volume going forward.
- Based on historical data and capital efficiency, EPS for the upcoming Q2 report may fall within the range of $2.10 to $2.20.
Overview
As a dividend growth investor, I love the ability to collect income from companies that have very visible product portfolios. The cusp of summer is here and that means lots of barbeques, family gatherings, and events that will have PepsiCo (PEP) products. I previously covered PEP and discussed how the price drop made it more attractive than Coca-Cola ( KO ). This time around, I wanted to provide an updated valuation and talk about how the lackluster recent performance can be attributed more to cyclical vulnerabilities rather than fundamental issues within. I will be providing my personal thoughts on the upcoming earnings as well....
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For further details see:
PepsiCo: Consistent Earnings Growth Despite Challenging Conditions