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Barclays Rated PepsiCo as ‘Equal-Weight’

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Price movement

PepsiCo (PEP) has a market cap of $148.6 billion. It fell 1.1% and closed at $103.46 per share on January 9, 2017. The stock’s weekly, monthly, and YTD (year-to-date) price movements were -1.1%, 0.63%, and -1.1%, respectively, on the same day. PepsiCo is trading 1.3% below its 20-day moving average, 0.27% below its 50-day moving average, and 0.39% below its 200-day moving average.

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Related ETF and peers

The SPDR S&P 500 Growth ETF (SPYG) invests 0.91% of its holdings in PepsiCo. SPYG’s YTD price movement was 2.0% on January 9.

The market caps of PepsiCo’s competitors are as follows:

  • Coca-Cola (KO) – $178.3 billion
  • Mondelez International (MDLZ) – $68.9 billion
  • Dr Pepper Snapple Group (DPS) – $16.7 billion

PepsiCo’s rating

On January 9, 2017, Barclays initiated the coverage of PepsiCo with an “equal-weight” rating. It set the stock’s price target at $102.0 per share.

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Performance in fiscal 3Q16

PepsiCo reported fiscal 3Q16 net revenues of $16.0 billion—a fall of 1.8% from $16.3 billion in fiscal 3Q15. The revenue from its Frito-Lay North America and North America Beverages segments rose 3.4% and 2.9%, respectively. The revenue from its Quaker Foods North America, Latin America, and Europe Sub-Saharan Africa segments fell 2.1%, 22.8%, and 1.9%, respectively, between fiscal 3Q15 and fiscal 3Q16.

Its net income and EPS (earnings per share) rose to $2.0 billion and $1.37, respectively, in fiscal 3Q16—compared to $533.0 million and $0.36, respectively, in fiscal 3Q15. It reported non-GAAP[1. generally accepted accounting principles] EPS of $1.40 in fiscal 3Q16—a rise of 3.7% compared to fiscal 3Q15.

PepsiCo’s cash and cash equivalents and inventories rose 12.8% and 14.7%, respectively, between fiscal 4Q15 and fiscal 3Q16.

Projections

PepsiCo made the following projections for fiscal 2016:

  • core EPS of $4.78
  • organic revenue growth of ~4.0%, excluding the impact of a 53rd week and structural changes, but including the deconsolidation of its Venezuelan operations
  • productivity savings of ~$1.0 billion

In the next part, we’ll look at Coca-Cola.

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