Stock Analysis & Valuation PepsiCo, Inc. (PEP.SW)

• Previous Close: CHF117.00
• Sector Valuation Confidence Level: Low

Valuation method	Value, CHF	Upside, %
Artificial intelligence (AI)	103.00	-12
Intrinsic value (DCF)	57.87	-51
Graham-Dodd Method		n/a
Graham Formula	47.90	-59

Strategic Investment Analysis

Company Overview

PepsiCo, Inc. (PEP.SW) is a global leader in the non-alcoholic beverage and convenient foods industry, operating across seven key segments including Frito-Lay North America, Quaker Foods North America, and PepsiCo Beverages North America. Headquartered in Purchase, New York, PepsiCo boasts a diversified product portfolio that includes iconic brands like Pepsi, Lay's, Gatorade, Quaker Oats, and Tropicana. The company serves a vast network of customers, from grocery stores and convenience outlets to e-commerce platforms, leveraging direct-store-delivery and distributor networks for efficient market penetration. With a strong presence in over 200 countries, PepsiCo continues to innovate in health-conscious and sustainable product offerings, reinforcing its position in the consumer defensive sector. Its robust financial performance and strategic acquisitions underscore its resilience in a competitive market.

Investment Summary

PepsiCo presents a compelling investment case due to its diversified product portfolio, strong brand equity, and consistent dividend payouts. With a market capitalization of CHF 183.7 billion and a beta of 0.48, the company offers stability in volatile markets. However, risks include high total debt (CHF 44.9 billion) and exposure to fluctuating commodity prices. The company's ability to innovate and expand in emerging markets could drive future growth, but investors should monitor competitive pressures and changing consumer preferences towards healthier options.

Competitive Analysis

PepsiCo's competitive advantage lies in its extensive brand portfolio and global distribution network, which enable it to maintain a dominant position in both beverages and snacks. The company's direct-store-delivery system ensures superior shelf presence and rapid product turnover, giving it an edge over competitors. PepsiCo's focus on health-conscious products, such as low-sugar beverages and organic snacks, aligns with shifting consumer trends, further strengthening its market position. However, the company faces intense competition from The Coca-Cola Company in beverages and Mondelez International in snacks. While PepsiCo's diversified revenue streams mitigate sector-specific risks, its reliance on North America (over 50% of revenue) exposes it to regional economic fluctuations. Strategic acquisitions, like the purchase of SodaStream, highlight PepsiCo's commitment to innovation and sustainability, but execution risks remain.

Major Competitors

• The Coca-Cola Company (KO): Coca-Cola is PepsiCo's primary rival in the beverage sector, with a stronger global brand presence and higher revenue. However, Coca-Cola lacks PepsiCo's diversified snack business, making it more vulnerable to shifts in beverage consumption trends. Coca-Cola's extensive bottling network and marketing prowess are key strengths, but its slower adaptation to health trends is a weakness.
• Mondelez International (MDLZ): Mondelez competes with PepsiCo in the snack segment, boasting brands like Oreo and Cadbury. While Mondelez has a strong international footprint, it lacks PepsiCo's beverage diversification. Its focus on premium snacks is a strength, but higher exposure to inflationary pressures in raw materials is a risk.
• Keurig Dr Pepper (KDP): Keurig Dr Pepper is a growing competitor in the beverage space, with a stronghold in coffee and carbonated drinks. Its merger with Keurig Green Mountain provides a unique edge in single-serve beverages, but its smaller scale compared to PepsiCo limits its global reach and product diversification.
• Nestlé S.A. (NSRGY): Nestlé competes with PepsiCo in both beverages and snacks, with a robust portfolio including Nescafé and KitKat. Its global presence and R&D capabilities are strengths, but slower growth in developed markets and regulatory challenges in health-focused products are weaknesses.