bsad 570 pepsico inc stock presentation 5.3.11
TRANSCRIPT
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8/2/2019 BSAD 570 PepsiCo Inc Stock Presentation 5.3.11
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PepsiCo Inc.BSAD 570 Managerial Finance Theory & Practice
Summer Kirch
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Outline
Companys history
SWOT analysis
Discussion of the recent financial crises Financial ratios and graphs.
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History
Founded in 1898 as The Pepsi Cola Company
by Bradham
Merged with Frito-Lay Inc. in 1965 to create
PepsiCo Inc.
Major product divisions include non-alcoholic
beverages and prepackaged goods
Sold restaurant division in 1997 (KFC, Pizza
Hut & Taco Bell)
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SWOT - Strengths
2nd highest market share in non-alcoholic
beverage industry
Strong brand recognition of most of itsproducts. (i.e. Pepsi, Lays, Mtn Dew)
Strong R&D division that constantly develops
new products Diversification
Distribution
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SWOT Weaknesses
Overdependence on Wal-Mart.
Overdependence on US Markets
Showed signs of low productivity
Companys image was damaged in 2008
Non uniform company name for some PepsiCo
products.
Brand Power below direct competitor Coke
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SWOT - Opportunities
Broaden its product base Purchase smaller brands
International expansion
Capitalize on the growing savory snack andbottled water market within the United States.
Enter into more agreements with restaurant
chains, movie theaters, entertainmentdestinations, and other companies to offer their
soft drinks and/or snacks.
Increase brand awareness
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SWOT - Threats
Industry is cut-throat & filled with major
players (Coca-Cola, Proctor & Gamble etc.) The decline in carbonated drink sales
Negative impact of government regulations
Independent labels gaining market share Regulatory changes to minimum wages for
factories
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Recommendations
Purchase independent labels in foreign
countries
Increase spending in advertising to increasebrand awareness
Capitalize on the growing savory snack and
bottled water market within the United States.
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Current Economic Crisis
On Thursday April 28, 2011 PepsiCo reported a
five percent increase in net revenues year over
year and reiterated its earnings growth targetto seven-eight percent for 2011
If inflation pressures persist PepsiCo will have
to look to some price increases to offset this.
Rising commodity costs could impact the
companys ability to pass on the costs to end
consumers which could be limited
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Return on Equity 5 Year Span
29
.86%
35.3
8% 4
2.4
7%
32.8
3%
36.7
1%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
Return on Equity For the Last Five Years
25-Dec-10
26-Dec-09
27-Dec-08
29-Dec-07
30-Dec-06
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Beta Coefficient Method
P = D1/(Rs g)
P = $1.92/(.055-.0047)
P = $34.07 per Beta Coefficient Method This model suggests that PEPs stock is
overpriced and should eventually drop down
to $38.17. Currently sells for $69.89 per share.
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P/E Ratio x EPS Method
P/E Ratio x EPS = Stock price expected value
17.59 x $3.92 = $68.95 per share
This method suggests that the equilibrium priceis only $0.06 higher than the current selling price
for PEP.
This tends to be why some experts have mixedemotions about this stock.
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Conclusion
Good market share & branding
Opportunity to expand to new markets.
PepsiCo Inc. is a very stable and safe stock. Questions?