US Equities Analysis

PEP — PepsiCo

Research evidence pack

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2. Company Fundamentals

2.1 Competitiveness

Metric Value
Operating Margins 16.96%
Profit Margins 9.15%
Return on Equity 43.88%
Return on Assets 9.09%
Free Float 1.36B
Dividend Yield 4.19%
Short Int % Utilisation 2.04%

2.2 Growth

Metric Value
Revenue Growth 8.5%
Free Cash Flow 8.75B
EBITDA 12.8 (Ratio)
Enterprise Value 239.3B
EV/Revenue 2.51
EV/EBITDA 12.8

Revenue growth of 8.5% indicates steady, moderate expansion.

2.3 Management

Role Metric
Consensus Rating N/A

2.4 Return

Metric Value
Expected Return (Ann.)* -0.51%
Risk / Std Dev (Ann.)* 21.17%
1-Year Price Return* -2.68%

Latest Market Data (as of 2026-08-14, US Eastern time):

Metric Value
Last Price $140.79
52-Week Range $133.73 – $171.48
Observation Count 251 trading days

The return and risk statistics use daily adjusted closes from the retrieved one-year series and annualise daily moments using 252 trading days. The last price is the latest regular-market price reported for the stated date. Source: Yahoo Finance market data.

2.5 FCFF DCF Valuation

Valuation basis: This research model follows a five-year, unlevered FCFF DCF. It starts from reported annual operating inputs, forecasts revenue and operating cash conversion under an explicit mechanical policy, discounts FCFF at WACC, applies a Gordon-growth terminal value, and bridges enterprise value to an indicative common-equity value per share. It is an analytical estimate rather than a recommendation or personalised target price.

Step 1 — Forecast Operating Profit and NOPAT

Reported operating input Value
Revenue $93.92B
Prior annual revenue $91.85B
EBIT $11.37B
Tax rate 19.03%
NOPAT = EBIT × (1 − tax rate) $9.20B
Forecast start-growth basis 2.25%
Forecast policy latest reported annual revenue growth, bounded to -10.00% / 15.00%

Step 2 — Calculate FCFF

Current FCFF building block Value
NOPAT $9.20B
Add: depreciation & amortisation $4.18B
Less: capital expenditure -$4.42B
Less/(add): working-capital cash-flow movement -$1.65B
Current unlevered FCFF $7.32B

Explicit FCFF forecast

Forecast year Revenue growth NOPAT D&A Capex Change in NWC FCFF Present value
1 2.25% $9.41B $4.27B -$4.51B -$1.68B $7.49B $7.28B
2 2.32% $9.63B $4.37B -$4.56B -$1.72B $7.72B $7.10B
3 2.38% $9.86B $4.48B -$4.60B -$1.76B $7.97B $6.94B
4 2.44% $10.10B $4.58B -$4.65B -$1.80B $8.23B $6.77B
5 2.50% $10.35B $4.70B -$4.70B -$1.85B $8.50B $6.62B

Step 3 — Determine the Discount Rate (WACC)

WACC input Value
Risk-free rate 4.71%
Equity risk premium assumption 5.50%
Beta 0.36
Cost of equity 6.70%
Pre-tax cost of debt 2.36%
WACC 5.71%
WACC validation requires assumption review

Step 4 — Estimate Terminal Value

Terminal-value input Value
Perpetuity growth rate 2.50%
Terminal value $271.58B
Implied terminal EV / EBITDA 15.54x
Terminal value as % of enterprise value 85.56%

Step 5 — Discount Cash Flows to Enterprise Value

Enterprise-value component Value
Present value of explicit FCFF $34.72B
Present value of terminal value $205.76B
Indicated enterprise value $240.48B
Discounting convention mid-year for explicit FCFF; terminal value discounted at year-end five

Step 6 — Convert Enterprise Value to Equity Value

Equity bridge Value
Indicated enterprise value $240.48B
Less: gross interest-bearing debt $49.90B
Add: cash and equivalents $9.53B
Add: affiliate investments $0.00
Less: minority interests $141.00M
Indicated common equity value $199.96B

Step 7 — Calculate Indicative Value Per Share

Per-share output Value
Shares used 1,373,000,000.00
Share-count basis reported diluted weighted-average shares
Current market price $140.18
DCF indicative value per share $145.64
Indicative value vs. market price 3.90%

Model Integrity Checks

Check Result
Perpetuity growth is below the risk-free rate pass
Perpetuity growth is below WACC pass
WACC is within the configured operating-company range review required
Terminal-year FCFF is positive pass
Terminal capex converges to D&A pass
Terminal-value concentration within review band
Implied price differs from spot by more than 30% within review band

2.6 Investor-Style Research Screen

Educational screen Result
Buffett-inspired cash-quality checks 4/4 evidenced checks
Lynch-inspired balance-and-growth checks 4/4 evidenced checks

Data lineage: Yahoo Finance public market and reported-statement data; retrieval timestamp: 2026-08-18 17:45:22.955902 UTC; latest reported fiscal period: 2025-12-31 00:00:00. Default assumptions: five-year forecast, mid-year discounting for explicit FCFF, a maximum 2.50% perpetuity-growth rate below both WACC and the risk-free rate, historical operating-ratio persistence, and capex convergence to D&A by year five. No sell-side consensus or management guidance is substituted for reported inputs. This is research and analysis only, not personalized financial advice.

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