Just a Dude Who Invests
Retail Investor, Economics & Technology Commentary
PepsiCo is cheap against its cash earnings, trading at 12x, or 11x next year's, while beverage companies usually get 17x. That puts fair value at $189.68 to $241.41, 17x next year's cash earnings give or take 12%, leaving $128.50 about 32% under the low end. This is a valuation-levels read off reported earnings and revenue estimates, not fundamental work. x.comÂ
Coca-Cola's retained earnings do little for shareholders when management does not distribute much of the growth. At 27 times earnings, a 2.3% yield with no expected large dividend hikes, special dividend or meaningful buybacks makes look-through earnings a poor basis for the price: EPS rose about $1 in five years while dividends rose only 52 cents. x.com x.com x.com x.comÂ
PepsiCo's forecast for another year of just 3% growth leaves it nowhere close to cheap. It trades at 16 times 2027 earnings. x.comÂ
PepsiCo is extreme value because its falling share price has lifted the dividend yield to 4.6% at just 15 times this year's earnings. Its dividend has risen for more than five decades. x.comÂ
Director Robert Pohlad's $23.7 million open-market share purchase bolsters PepsiCo's risk/reward case. Buying this very solid company near its 200-month moving average looks like a solid setup. x.comÂ
PepsiCo is under pressure because consumers can no longer really afford a can of soda, as the company cut its profit outlook citing a slower North American recovery. The stock is approaching its monthly 200-period moving average, a secular bear-market line that breaks only during economic depressions. If it breaks, $75 is the next level. x.comÂ
Insider buying points to opportunity in PepsiCo shares despite the market's pessimism. Former PepsiAmericas CEO Robert Pohlad spent $23.7 million on the stock during its deepest drawdown since the 2008 financial crisis. x.comÂ
Coca-Cola's forward revenue growth numbers are pitiful, yet the stock trades at 26x next-twelve-month EPS, which makes no sense. x.comÂ
PepsiCo looks unattractive because, since Covid, supermarket sections where shoppers used to load up on its products have looked empty. The bearish view dates back to 2021. x.comÂ
Coca-Cola's valuation is no longer compelling despite strong operational execution. Shares trade at about 26.7 times earnings versus a historical average of 22.3, so much of the near-term optimism is priced in. Continued earnings growth can support the premium, but the margin of safety is considerably smaller. x.comÂ