PepsiCo Inc. (NYSE:PEP) is a global beverage and food company which is organized into four business units: PepsiCo Americas Foods (PAF), PepsiCo Americas Beverages (PAB), PepsiCo Europe and PepsiCo Asia, Middle East and Africa (AMEA). The company has a consistent dividend track record. As a global food and beverage company with brands that stand for quality, and are respected household names — Pepsi-Cola, Lay's, Quaker Oats, Tropicana and Gatorade, to name a few. It has a portfolio of enjoyable and wholesome foods and beverages.
Soft drinks are an all-time favorite among people of all ages. PEP, being the leader in the beverage industry, is constantly innovating new products and techniques for its valued customers. Over the years, this company has also provided a decent return to its valued investors.The snacks business is attractively positioned to drive growth while the company continues to hold the line with beverages.
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- PEP 15-Year Financial Data
- The intrinsic value of PEP
- Peter Lynch Chart of PEP
The Board of Directors of the company recently declared quarterly dividend of $0.655 per share slated to be payable on September 30, 2014. This marks 15% increase compared to earlier period. PepsiCo has returned approximately $60 billion to shareholders in the form of dividends and share repurchases over the last 10 years.
With a current payout ratio of 50%, and EPS set to grow at 7.95% over the next five years according to analysts' estimates, there is plenty of room for this company to grow. Pepsi was able to grow its revenue at a compounded annual growth rate of 8.65% over the last five years, from $43.2 billion in 2008, to $65.5 billion in 2012.
Pepsi is both a food and beverage company, with 52% of Pepsi's overall 2013 revenue coming from food. PEP has grown its free cash flows at compound annual growth rate of 7.38%. PepsiCo plans to direct $3 billion toward capital spending. Last year, PepsiCo spent $2.7 billion on capital spending.
Pepsi is on pace to grow core earnings by 7.5%-8.5% over the coming 5-10 years, and is also receiving 1.5% earnings per share growth from a share buyback program. Frito-Lay North America alone constitutes over one-third of PepsiCo’s valuation. This division saw a 4% rise in organic sales, bolstered by both volume and net pricing increases. The company is the leader in savory snacks in the U.S. with a 36.6% market share. Maximum growth for PepsiCo came from Russia and Brazil, reporting double-digit increases in sales. Russia is the largest international market for the company, and together with Brazil, constituted 10% of the company’s net sales last year.
PepsiCo's overall revenues grew by 1.4 percent in 2013 despite a 1.6 percent drop in beverage revenues. That's because beverages account for just less than 32 percent of the company's revenues. PepsiCo isn't just a soft-drink business. It's a snack business, owning such household brands as Fritos, Doritos, Lays and Cheetos, to name a few.
Investment Plans Ahead
In the next five years, Pepsi has plans to invest $5 billion in Mexico in a move that is expected to add 4,000 new jobs to the country’s economy and boost production for the soft drink giant. Behind the United States and Russia, Mexico was Pepsi’s third-largest country in revenue in 2012, comprising $4 billion or six percent of the company's $65.49 billion in global sales. The company has about 40,000 current employees working in Mexico.
Pep’s plans of aggressively investing in emerging economies has paid off since in 2012, emerging markets accounted for 35 percent of the company's net revenue. And PepsiCo plans price hikes of as much as 3% this year in its beverages and snacks divisions to drive sales higher.
Investing in Wellness Programs
PepsiCo Foundation announced two grants geared towards improving the health and wellness of America's kids through the power of physical activity and good nutrition. The grants, totaling $1.25 million USD, support the GENYOUth Foundation's flagship program, Fuel Up to Play 60, and the United Way of Metropolitan Dallas' Healthy Zone School (HZS) Recognition Program, two leading school-based health and wellness programs.
Fuel Up to Play 60 is the nation's largest in-school wellness program, helping schools provide increased opportunities to be physically active for 60 minutes a day and access to tasty, nutrient-dense foods in more than 73,000 schools.
With net revenues of more than $65 billion and a product portfolio that includes 22 brands that generate more than $1 billion each in annual retail sales, PepsiCo is committed to sustainable growth by investing in a healthier future for the investors. PepsiCo is providing stable returns to its shareholders over the years. The company is expected to keep up the momentum. It is expecting to grow its earnings per share by 7% over this year. This indicates that the company will keep its history of consistently increasing dividends. With the recent details of its financials, PepsiCo is expected to quench the thirst of its consumers in the near future.
PepsiCo products are enjoyed by consumers one billion times a day in more than 200 countries and territories around the world. PepsiCo has moved beyond just providing soda. It has an attractive foods business that provides snacks and breakfast goods with a stable of well-established brands such as Frito Lay and Doritos.