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Module 12: PepsiCo

Module 12: PepsiCo. Beverage Industry: Soft Drinks. Consist of corporations that produce and sell soft drinks Some of these companies also sell food items Global soft drinks’ total revenue over $600 billion. Major Soft Drink Corporations. Coca-Cola PepsiCo Dr. Pepper Snapple

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Module 12: PepsiCo

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  1. Module 12: PepsiCo

  2. Beverage Industry: Soft Drinks • Consist of corporations that produce and sell soft drinks • Some of these companies also sell food items • Global soft drinks’ total revenue over $600 billion

  3. Major Soft Drink Corporations • Coca-Cola • PepsiCo • Dr. Pepper Snapple • Monster Beverage Co.

  4. PepsiCo • Food/beverage corporation headquartered in New York • Product Pepsi-Cola and Frito-Lay merger in 1965 • $65.49 billion in net revenue in 2012

  5. PepsiCo Growth Strategy • Research and development activities • Drive innovation globally • Develop new products • Improve quality of existing products • Enhance production processes • Implement new, useful technologies

  6. PepsiCo Business Units • PepsiCo Americas Foods • PepsiCo Americas Beverages • PepsiCo Europe • PepsiCo Asia, Middle East and Africa

  7. PepsiCo Carbonated Drinks • Pepsi • Mountain Dew • 7 Up • Mirinda • Pepsi Max • Sierra Mist

  8. PepsiCo Non-Carbonated Drinks • Tropicana • Gatorade • Lipton Teas • Aquafina

  9. Snack Foods • Lay’s • Doritos • Quaker Foods • Cheetos • Ruffles • Tostitos • Fritos • Walkers

  10. Reformulation

  11. Reformulation

  12. Time Series Trend Analysis

  13. Time Series Trend Analysis

  14. % of Revenue Trend Analysis

  15. % of Revenue Trend Analysis

  16. Reformulation

  17. Reformulation

  18. Time Series Trend Analysis

  19. Time Series Trend Analysis

  20. % of Revenue Trend Analysis

  21. % of Revenue Trend Analysis

  22. Parsimonious Assumptions • Got Sales Growth rate from last year’s trend and analyst reports • Got EPM from increase of 2012 ratio to 2013 ratio • Got EATO from average of 2010 to 2013 ratios

  23. Assumptions and Forecasts

  24. DCF Model

  25. AEIG Model

  26. REI Model

  27. Value Comparison

  28. Analysis • Steady Sales growth and Profit Margin growth are contributing to higher EPAT over the long term • Market Stock Price = $85.91 • Calculated Stock Price from Valuation = $108.68 • Recommendation: Buy Stock, as the Valuation implies it is currently underpriced.

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