PEP
PepsiCo, Inc.
$142.02
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Fair Value
Trading 6.4% below fair value
You pay
$142.02
Bear
$130.01
Fair
$151.69
Bull
$173.36
Bear
$130.01
-8.5%
$6.89 × 18x P/E
Fair
$151.69
+6.8%
$6.89 × 21x P/E
Bull
$173.36
+22.1%
$6.89 × 24x P/E
Key Value Driver
Normalized P/E multiple (21x base case)
Implied Market Multiple
20.6x
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 $167.89 from 45 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $151.69 per share.
Warnings
The company pays out 96% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Dividend-based valuation: $253.84 (above our primary estimate by 75%). 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