PEP
PepsiCo, Inc.
$138.37
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Fair Value
Trading 6.5% below fair value
You pay
$138.37
Bear
$126.88
Fair
$148.02
Bull
$169.16
Bear
$126.88
-8.3%
$6.89 × 18x P/E
Fair
$148.02
+7.0%
$6.89 × 21x P/E
Bull
$169.16
+22.3%
$6.89 × 24x P/E
Key Value Driver
Normalized P/E multiple (21x base case)
Implied Market Multiple
20.1x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $155.64 from 46 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $148.02 per share.
Warnings
The company pays out 97% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Dividend-based valuation: $241.04 (above our primary estimate by 67%). Large gaps may signal the dividend doesn't reflect full earning power.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples