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PepsiCo (XTER:PEP) Financial Strength : 5 (As of Sep. 2024)


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What is PepsiCo Financial Strength?

PepsiCo has the Financial Strength Rank of 5.

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors:

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.
2. Debt to revenue ratio. The lower, the better.
3. Altman Z-Score.

PepsiCo's Interest Coverage for the quarter that ended in Sep. 2024 was 17.68. PepsiCo's debt to revenue ratio for the quarter that ended in Sep. 2024 was 0.48. As of today, PepsiCo's Altman Z-Score is 3.91.


Competitive Comparison of PepsiCo's Financial Strength

For the Beverages - Non-Alcoholic subindustry, PepsiCo's Financial Strength, along with its competitors' market caps and Financial Strength data, can be viewed below:

* 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. Note that "N/A" values will not show up in the chart.


PepsiCo's Financial Strength Distribution in the Beverages - Non-Alcoholic Industry

For the Beverages - Non-Alcoholic industry and Consumer Defensive sector, PepsiCo's Financial Strength distribution charts can be found below:

* The bar in red indicates where PepsiCo's Financial Strength falls into.



PepsiCo Financial Strength Calculation

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:

PepsiCo's Interest Expense for the months ended in Sep. 2024 was €-197 Mil. Its Operating Income for the months ended in Sep. 2024 was €3,489 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Sep. 2024 was €34,679 Mil.

PepsiCo's Interest Coverage for the quarter that ended in Sep. 2024 is

Interest Coverage=-1*Operating Income (Q: Sep. 2024 )/Interest Expense (Q: Sep. 2024 )
=-1*3488.672/-197.319
=17.68

The higher the ratio, the stronger the company's financial strength is.

2. Debt to revenue ratio. The lower, the better.

PepsiCo's Debt to Revenue Ratio for the quarter that ended in Sep. 2024 is

Debt to Revenue Ratio=Total Debt (Q: Sep. 2024 ) / Revenue
=(Short-Term Debt & Capital Lease Obligation + Long-Term Debt & Capital Lease Obligation) / Revenue
=(5878.124 + 34679.49) / 84041.676
=0.48

3. Altman Z-Score.

Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

The zones of discrimination were as such:

When Z-Score is less than 1.81, it is in Distress Zones.
When Z-Score is greater than 2.99, it is in Safe Zones.
When Z-Score is between 1.81 and 2.99, it is in Grey Zones.

PepsiCo has a Z-score of 3.91, indicating it is in Safe Zones. This implies the Z-Score is strong.

Good Sign:

Altman Z-score of 3.91 is strong.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


PepsiCo  (XTER:PEP) Financial Strength Explanation

The maximum rank is 10. Companies with rank 7 or higher will be unlikely to fall into distressed situations. Companies with rank of 3 or less are likely in financial distress.

PepsiCo has the Financial Strength Rank of 5.


PepsiCo Financial Strength Related Terms

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PepsiCo Business Description

Address
700 Anderson Hill Road, Purchase, NY, USA, 10577
PepsiCo is a global leader in snacks and beverages, owning well-known household brands including Pepsi, Mountain Dew, Gatorade, Lay's, Cheetos, and Doritos, among others. The company dominates the global savory snacks market and also ranks as the second-largest beverage provider in the world (behind Coca-Cola) with diversified exposure to carbonated soft drinks, or CSD, as well as water, sports, and energy drink offerings. Convenience foods account for approximately 55% of its total revenue, with beverages making up the rest. Pepsi owns the bulk of its manufacturing and distribution capacity in the US and overseas. International markets make up 40% of total sales and one third of operating profits.