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PepsiCo Inc  (NAS:PEP) Piotroski F-Score: 6 (As of Today)

The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

PepsiCo Inc has an F-score of 6 indicating the company's financial situation is typical for a stable company.

NAS:PEP' s Piotroski F-Score Range Over the Past 10 Years
Min: 4   Max: 8
Current: 6

4
8

During the past 13 years, the highest Piotroski F-Score of PepsiCo Inc was 8. The lowest was 4. And the median was 6.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

PepsiCo Inc Annual Data

Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 6.00 7.00 7.00 5.00 5.00

PepsiCo Inc Quarterly Data

Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 6.00 5.00 5.00 5.00 6.00

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


PepsiCo Inc Distribution

* The bar in red indicates where PepsiCo Inc's Piotroski F-Score falls into.


How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar19) TTM:Last Year (Mar18) TTM:
Net Income was 1820 + 2498 + 6854 + 1413 = $12,585 Mil.
Cash Flow from Operations was 2396 + 3645 + 4683 + -345 = $10,379 Mil.
Revenue was 16090 + 16485 + 19524 + 12884 = $64,983 Mil.
Gross Profit was 8827 + 8958 + 10588 + 7196 = $35,569 Mil.
Average Total Assets from the begining of this year (Mar18)
to the end of this year (Mar19) was
(81887 + 78731 + 73632 + 77648 + 75466) / 5 = $77472.8 Mil.
Total Assets at the begining of this year (Mar18) was $81,887 Mil.
Long-Term Debt & Capital Lease Obligation was $28,458 Mil.
Total Current Assets was $17,917 Mil.
Total Current Liabilities was $19,090 Mil.
Net Income was 2105 + 2144 + -710 + 1343 = $4,882 Mil.

Revenue was 15710 + 16240 + 19526 + 12562 = $64,038 Mil.
Gross Profit was 8651 + 8872 + 10447 + 6907 = $34,877 Mil.
Average Net Income from the begining of last year (Mar17)
to the end of last year (Mar18) was
(74622 + 76943 + 78463 + 79804 + 81887) / 5 = $78343.8 Mil.
Total Assets at the begining of last year (Mar17) was $74,622 Mil.
Long-Term Debt & Capital Lease Obligation was $31,931 Mil.
Total Current Assets was $33,047 Mil.
Total Current Liabilities was $25,885 Mil.

Profitability

Question 1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by Total Assets at the beginning of the year.

Score 1 if positive, 0 if negative.

PepsiCo Inc's current Net Income (TTM) was 12,585. ==> Positive ==> Score 1.

Question 2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by Total Assets at the beginning of the year.

Score 1 if positive, 0 if negative.

PepsiCo Inc's current Cash Flow from Operations (TTM) was 10,379. ==> Positive ==> Score 1.

Question 3. Change in Return on Assets

Compare this year's return on assets (1) to last year's return on assets.

Score 1 if it's higher, 0 if it's lower.

ROA (This Year)=Net Income/Total Assets(Mar18)
=12585/81887
=0.1536874

ROA (Last Year)=Net Income/Total Assets(Mar17)
=4882/74622
=0.06542307

PepsiCo Inc's return on assets of this year was 0.1536874. PepsiCo Inc's return on assets of last year was 0.06542307. ==> This year is higher. ==> Score 1.

Question 4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA <= ROA.

PepsiCo Inc's current Net Income (TTM) was 12,585. PepsiCo Inc's current Cash Flow from Operations (TTM) was 10,379. ==> 10,379 <= 12,585 ==> CFROA <= ROA ==> Score 0.

Funding

Question 5. Change in Gearing or Leverage

Compare this year's gearing (long-term debt divided by average total assets) to last year's gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Mar19)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Mar18 to Mar19
=28458/77472.8
=0.36732892

Gearing (Last Year: Mar18)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Mar17 to Mar18
=31931/78343.8
=0.40757533

PepsiCo Inc's gearing of this year was 0.36732892. PepsiCo Inc's gearing of last year was 0.40757533. ==> This year is lower or equal to last year. ==> Score 1.

Question 6. Change in Working Capital (Liquidity)

Compare this year's current ratio (current assets divided by current liabilities) to last year's current ratio.

Score 1 if this year's current ratio is higher, 0 if it's lower

Current Ratio (This Year: Mar19)=Total Current Assets/Total Current Liabilities
=17917/19090
=0.93855422

Current Ratio (Last Year: Mar18)=Total Current Assets/Total Current Liabilities
=33047/25885
=1.27668534

PepsiCo Inc's current ratio of this year was 0.93855422. PepsiCo Inc's current ratio of last year was 1.27668534. ==> Last year's current ratio is higher ==> Score 0.

Question 7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 0 if there is larger number of shares in issue this year, 1 otherwise.

PepsiCo Inc's number of shares in issue this year was 1413. PepsiCo Inc's number of shares in issue last year was 1430. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

Efficiency

Question 8. Change in Gross Margin

Compare this year's gross margin (Gross Profit divided by sales) to last year's.

Score 1 if this year's gross margin is higher, 0 if it's lower.

Gross Margin (This Year: TTM)=Gross Profit/Revenue
=35569/64983
=0.54735854

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=34877/64038
=0.54462975

PepsiCo Inc's gross margin of this year was 0.54735854. PepsiCo Inc's gross margin of last year was 0.54462975. ==> This year's gross margin is higher. ==> Score 1.

Question 9. Change in asset turnover

Compare this year's asset turnover (total sales for the year divided by total assets at the beginning of the year) to last year's asset turnover ratio.

Score 1 if this year's asset turnover ratio is higher, 0 if it's lower

Asset Turnover (This Year)=Revenue/Total Assets at the Beginning of This Year (Mar18)
=64983/81887
=0.79356919

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Mar17)
=64038/74622
=0.85816515

PepsiCo Inc's asset turnover of this year was 0.79356919. PepsiCo Inc's asset turnover of last year was 0.85816515. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+1+0+1+0+1+1+0
=6

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

PepsiCo Inc has an F-score of 6 indicating the company's financial situation is typical for a stable company.

Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


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