PepsiCo adds $US3.7 billion in MCap, top heavyweight rise in Beverages/Drinks sector 10 July 2019

NEWS BITES - NORTH AMERICA

PepsiCo, Inc. (NASDAQ:PEP), the NASDAQ's largest Beverages/Drinks company by market cap, has lifted $US2.67 (2.0%) from its previous trading session to close at $US134.41. Compared with the NASDAQ-100 Index which rose 76.5 points (1%) in the day, the relative price increase was 1.0%. The rise has been propped up by firm volume of 1.3 times the average daily volume of 4.9 million shares. It posted the highest rise in MCap with the most influence on the Beverages/Drinks sector. There were 6,133,000 shares worth $US824.3 million traded today.

TODAY'S NEWS

INSTITUTIONAL BUYING

PepsiCo (NASDAQ:PEP) institutional shareholder Retirement Systems Of Alabama (CIK:0001593051) bought 62,481 shares in the quarter ended June 30, 2019 worth $US8.2 million at an estimated Volume Weighted Average Price (VWAP) of USD128.39. At the end of the quarter Retirement Systems Of Alabama held 1,096,565 shares worth $US140.8 million.

INSTITUTIONAL SELLING

PepsiCo (NASDAQ:PEP) institutional shareholder Farmers Trust Co (CIK:0001318055) sold 7,644 shares in the quarter ended June 30, 2019 worth $US1 million at an estimated Volume Weighted Average Price (VWAP) of USD128.39. At the end of the quarter Farmers Trust Co held 62,297 shares worth $US8 million. The net decrease in holdings over the last one and half year was 18,244 shares (23% of the shares held one and a half year ago).

PATENT

PepsiCo issued new patent

Low-pressure carbonation for carbonated soft drink equipment [10,343,887]

A carbonated drink dispensing system includes a carbonation tank, a CO.sub.2 cylinder configured to deliver CO.sub.2 to the carbonation tank at a pressure of between 50 psi and 60 psi, a low-pressure pump configured to pump water into the carbonation tank, and a level sensor configured to determine when the water in the carbonation tank has reached a pre-determined level. The low-pressure pump is configured to stop pumping water when the level sensor determines that the water in the carbonation tank has reached the pre-determined level. The low-pressure pump starts pumping water again after a time delay.

read more

BEARISH TURNING POINT

Williams % R

The stock is overbought according to the Williams % R indicator of -18.4, suggesting the price is close to its 14-day high. The Williams % R was previously -77.4.

Stock Summary

Today's close (USD)134.41
52-Week Range (USD)102.9-135.2
SectorBeverages/Drinks sector
Shares Outstanding1,401,822,000
Market Cap$US188.4 billion

Highlights in today's Report:

SECTION 1 TODAY'S BULLISH SIGNALS

SECTION 2 TODAY'S BEARISH SIGNALS

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF $US134.41):

SECTION 3 THE PAST WEEK

SECTION 4 ONGOING BULLISH PARAMETERS

SECTION 5 ONGOING BEARISH PARAMETERS

SECTION 6 REPORTED BUYING AND SELLING

SECTION 7 SUMMARY FINANCIALS

SECTION 8 CORPORATE PROFILE

SECTION 1 PEPSICO BULLISH SIGNALS

1.1 Undervaluation [compared with sector average]:

Price/Earnings and Earnings Yield

+ Price/Earnings of 15.1 [16.7]. We estimate PepsiCo stock is trading at a current year P/E of 9 and a forward year P/E of 5.4. The P/E of 15.1 plus annual inflation in the United States of 1.8% adds up to 16.9, well within the value benchmark Rule of 19.

+ Earnings yield of 6.6% is 3.2 times the 10-year bond yield of 2.08%.

Dividend Yield

+ To quote Benjamin Graham: "A dividend yield of at least two-thirds the triple-A bond yield"; the stock's dividend yield is 1.3 times the triple-A bond yield of 2.1%.

+ The relative yield of PEP, defined by its yield of 2.8%, divided by average yield of dividend yielding stocks in the NASDAQ-100 Index of 0.9% is 292.6%. This suggests PepsiCo stock is undervalued in dividend yield terms.

Price to Sales

+ Price/Sales of 2.9 [3.0]. We estimate PepsiCo stock is trading at a current year Price/Sales of 2.9 and a forward year Price/Sales of 2.8.

1.2 Undervaluation Indicator and rank of PepsiCo in the NASDAQ market:

DescriptionValueRank In Market
* EV/EBITDA24.0In Top Quartile

* Enterprise value of $US220.8 billion is divided by Earnings before interest tax depreciation and amortization of $US9.2 billion.

1.3 Uptrend:

Price/Moving Average Price and MACD:

+ The Price/MAP of 1.14 for PEP is higher than the Price/MAP for the NASDAQ-100 Index of 1.12.

+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 132.81 minus the 26-day EMA of 132.12 is positive suggesting a bullish signal. Both the 12-day EMA as well as the 26-day EMA are rising, another bullish signal.

+ The price to 50-day EMAP ratio is 1.0, a bullish indicator. In the past 50 days this ratio has exceeded 1.0, 31 times suggesting further upside. The 50-day EMAP has increased to $US130.16. An increase is another bullish indicator.

+ The price to 200-day MAP ratio is 1.14, a bullish indicator. In the past 200 days this ratio has exceeded 1.14 nine times suggesting further upside. The stock is trading above both its MAPs and the 50-day MAP of $US130.58 is higher than the 200-day MAP of $US117.96, a bullish indicator. The 200-day MAP has increased to $US117.96. An increase is another bullish indicator.

Past Week:

+ PepsiCo, Inc. is placed 977/2470 in BuySellSignals' ranking of NASDAQ performers in the past week, a percentile ranking of 61.

+ In the past week, volume was 1.1 times average and the shares were up 0.3%. Wednesday's close price is at a 1.1% premium to its 5-day Volume Weighted Average Price (VWAP) of $US132.95.

Past Month:

+ In the past three months the stock has hit a new 52-week high thirteen times, pointing to a significant uptrend.

+ The present value of $US1,000 (PV1000) invested one month ago in PepsiCo is $US1,006, for a capital gain of $US6.

PV$10001-week1-month1-year
PEP.NASDAQ1,0031,0061,259
NASDAQ-100 Index1,0061,0311,085

Relative Strength (6 months):

+ In the NASDAQ market of 2,450 stocks and 11 units traded today, the stock has a 6-month relative strength of 78 indicating it has outperformed 78% of the market.

1.4 High Price Performance Indicators and rank of PepsiCo in the NASDAQ market:

DescriptionPEP ValueRank In Market
MCap$US188.4 billionIn Top 1%
Today's Trading Turnover$US824.3 millionIn Top 2%

SECTION 2 PEPSICO BEARISH SIGNALS

2.1 Overvaluation [compared with sector average]:

MCap/Total Assets

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 2.4. Compared with the rest of the market the stock is overvalued and ranks in the bottom quartile of stocks by value of Q Ratio.

2.2 Downtrend:

+ Increasing Put Call Ratio

+ Put Call Contracts

The Put/Call ratio has jumped from 0.768 to 0.772 suggesting a downtrend.

Put ContractsCall ContractsPut/Call ratio
Today26,62334,5020.772
Previous day23,92431,1360.768

Overbought/Bearish Signals:

+ The stock is overbought according to the Williams % R indicator of -18.4, suggesting the price is close to its 14-day high of $US135.24.

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF $US134.41):

SECTION 3 THE PAST WEEK

3.1 Snapshot: PepsiCo stock was up 42.0c or 0.3% in the past week. Volume in the week was 1.2 times average trading of 19.6 million shares. It outperformed the NASDAQ-100 index in 3 out of 5 days.

DayPepsiCoClose price [USD]Price change %Relative change %Comment
TuesdayDrops to one-month low on robust volume131.74-0.6-1.1VI*=1.7
MondayDecreases132.56-0.30.4VI*=1.2
FridayFalls in weak trading with rising open interest133.02-0.7-0.5Steepest Fall
WednesdayIncreases strengthening above moving average price133.991.20.4Top Rise
TuesdayRises for a second consecutive day132.430.40.01Price/MAP50 above 1 and rising

[Volume Index (VI); 1 is average]

3.2 Corporate Wires: PepsiCo (PEP) issued one Release in the past week.

July 09: PepsiCo Reports Second Quarter 2019 Results

PURCHASE, N.Y., July 9, 2019 -- PepsiCo, Inc. (NASDAQ: PEP) today announced that its second quarter 2019 (ended June 15, 2019) financial results and Form 10-Q are available on its website at www.pepsico.com/investors.

As previously announced, PepsiCo will webcast its earnings conference call for investors and financial analysts at 7:45 a.m.

3.3 Stock Buzz: Past Week

News DateHeadlinePublisher
Jul 09PepsiCo's Sales Rise as Brands Resonate With ConsumersADVFN
Jul 09PepsiCo Q2 Numbers Pop, Stock FizzlesBayStreet
Jul 09PepsiCo Earnings: PEP Stock Ticks Lower Despite Strong Q2 ReportInvestorPlace
Jul 09PepsiCo's Top Line Sparkles in the First Half of 2019Nasdaq
Jul 09PepsiCo Reports Second Quarter 2019 ResultsPR Newswire
Jul 09PepsiCo beat Q2 bottom-line estimates, reaffirms FY2019 outlookSeeking Alpha
Jul 09Stocks - Tesla, Cisco Fall Premarket; PepsiCo RisesYahoo Singapore Finance
Jul 09As Investors Await Fed Chair Testimony Wednesday, PepsiCo Delivers Strong Resultsbenzinga.com
Jul 09PepsiCo Earnings Top Expectationsfinancialbuzz.com
Jul 08Even a Solid Q2 Report May Not Push Pepsi Stock Any HigherYAHOO!
Jul 05Call Traders See Ceiling Ahead as PepsiCo Prepares for EarningsYahoo Finance

3.4 Volatility:

+ PepsiCo is at a discount of 0.6% to its 12-month high of $US135.24 on June 24. It is also at a premium of 30.7% to the 12-month low of $US102.87 on October 12, 2018.

SECTION 4 ONGOING BULLISH PARAMETERS

4.1 Performance:

+ Return on Assets 16.2% [15.9%].

4.2 Growth:

+ Over the last 3 years average annual compound growth rate of earnings per share was 12.1%. This is considered moderate.

+ Year-on-Year Earnings Growth of 160%.

4.3 High Growth and Performance Indicators and rank of PepsiCo in the NASDAQ market:

DescriptionValueRank In Market
EPS Growth %160In Top 5%
Return on Assets [ROA] %16.2In Top 10%

4.4 Moving Annual Return (Past 5 years)

Based on a dynamic start date of 5 years ago, the real rate of return has averaged 12.7%. The Moving Annual Return has consistently exceeded 1%.

PEPClose (USD)Dividends (USD)Capital Gain / (Loss) %% YieldAnnual Return %
Jul 10134.413.74223.425.4
1 Yr ago110.193.34(1.4)31.6
2 Yrs ago111.723.066.72.99.6
3 Yrs ago104.722.8614.53.117.6
4 Yrs ago91.492.676.13.19.2

Close 5 years ago $US86.26

4.5 Increased ADVT past five years

Avg. Daily Volume Traded 12 months ended Jul 10, million shares

YearADVT
20194.9
20184.2
20173.7
20164.7
20154.3

In the past five years, Average Daily Volume of Trading (ADVT) has increased 13.3% to 4.9 million shares.

4.6 Increased VWAP

Past five years, 12 months ended Jul 10 (USD)

YearHigh PriceVWAPLow Price
2019135.24116.06102.87
2018118.49106.9192.79
2017114.36105.1395.31
2016105.4295.9773.97
201597.4591.6484.04

In the past five years Volume Weighted Average Price (VWAP) has increased by 26.6% to $US116.06. Based on a dynamic start date of five years ago, there has been no decline in VWAP over the last 5 years.

4.7 Increased Average Daily Turnover

Past five years, 12 months ended Jul 10 (USD million)

YearAverage Daily Turnover
2019563.1
2018451.9
2017394.4
2016450.2
2015399.8

In the past five years, average daily share turnover has increased 40.9% to $US563.1 million. This suggests increased liquidity.

4.8 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 75.7% (or a turnover period of 1 year 3 months). The average length of ownership of the stock is 2.3 times the average holding period of 6 months for stocks in the NASDAQ-100 Index suggests a larger number of core investors, making a long-term investment safer.

SECTION 5 ONGOING BEARISH PARAMETERS

5.1 Performance:

+ Return on Capital Employed 16.6% [16.7%].

+ Net profit margin has averaged 12.4% in the last 3 years. This is lower than the sector average of 13% and suggests a low margin of safety.

5.2 Growth:

Quarterly Trend in Revenue, Net Profit and Net Profit Margin:

+ Net Profit margin is positive but falling in recent quarters. [All figures in %]

Qtr-endedRevenue GrowthNet Profit GrowthNet Profit Margin
Mar 19 [Q1]-34-79.411
Dec 18 [Q4]--35.2

5.3 High Debt Indicators:

+ The debt to equity ratio of 221.3% is above a safe benchmark figure of 70%. However, it has improved from 357.7% a year ago.

+ Total Liabilities/EBITDA of 6.9 compares unfavourably with the Joseph Piotroski benchmark of 5.

DescriptionValueRank In Market
Debt to Equity2.2In Bottom 6%

5.4 Decrease in Institutional Ownership

Quarter-endDecember 31, 2018March 31, 2019
Holdings (%)72.462.5

As at March 31, 2019 Institutions held 62.5% of total shares on issue; a decrease from 72.4% as at December 31, 2018.

SECTION 6 PEPSICO REPORTED BUYING AND SELLING

6.1 Institutional Buying and Selling Quarter Ended March 31

Total reported Institutional buying = 43,207,528 shares

Total reported Institutional selling = 53,336,452 shares

Net reported institutional selling = 10,128,924 shares

6.2 Reported Holdings of Institutions as at Mar 31, 2019

Total = 875,911,502 shares

Market Value = $US107.3 billion

Institutions hold 62.5% of Issued Shares.

SECTION 7 PEPSICO SUMMARY FINANCIALS

7.1 Dividend History

+ Trailing 12 months dividend for the 12 months ended July 10 has improved from $US2.67 in 2015 to $US3.74 in 2019; there were no declines in the past 5 years. Dividends were up 11.8% for the 12 months ended July 10 from $US3.34 in 2018 to $US3.74 in 2019.

7.2 Financials Summary

Year endedDec 2018Dec 2017Dec 2016
Sales (USD B)64.763.562.8
Pretax (USD B)9.29.68.6
Net (USD B)12.54.96.3
EPS (USD)8.843.44.36

+ Net profit was up 157.7% from US$4.9 billion in 2017 to US$12.5 billion in 2018.

+ Earnings Per Share (EPS) was up 160% from $US3.40 to $US8.84.

7.3 Quarterly Report: Key Parameters

Quarterly Report Q1 2019: PepsiCo EPS plummets 79%

PepsiCo (NASDAQ:PEP), announced EPS of $US1.01 for the quarter-ended 23 March 2019 [Q1/2019], down 79.1% sequentially from $US4.83 in the previous quarter [Q4/2018].

Quarter-ended23 Mar [Q1/2019]29 Dec [Q4/2018]08 Sep [Q3/2018]
EPS, $US1.014.831.77
Sequential growth in EPS %-79.09172.8838.28
Revenue$US12.9b$US19.5b$US16.5b
Sequential growth in Revenue %-34.01-2.45
Net Profit$US1.4b$US6.9b$US2.5b
Sequential growth in Net Profit %-79.38-37.25

Compared with the previous corresponding period [PCP; Q1/2018], year-over-year [y.o.y.] EPS was up 7.4%, Revenue was up 2.6% and Net Profit was up 5.2%.

Quarter-ended23 Mar [Q1/2019]24 Mar [Q1/2018]
EPS, $US1.0194.0
PCP growth in EPS %7.452.17
Revenue$US12.9b$US12.6b
PCP growth in Revenue %2.563.66
Net Profit$US1.4b$US1.3b
PCP growth in Net Profit %5.211.9

7.4 Annual Report: Key Parameters

FY2018 Annual Report: PepsiCo Net Profit up 158%

PepsiCo (NASDAQ:PEP) reported net profit for the year-ended 29 December 2018 of $US12.5b, up 157.7% from $US4.9b in the previous year.

Major changes compared with previous year:

Favourable Changes:

- Debt to Equity down 38.3% from 3.6 to 2.2

- Total liabilities to Total assets down 5.8% from 0.9 to 0.8

- Retained earnings to total assets up from 49.9% to 57.7%

- Total non-current assets to Total Assets up from 61.1% to 71.8%

- Fixed Assets to Total Assets up from 21.6% to 22.7%

Unfavourable Changes:

- EBIT Margin down from 15.1% to 14.2%

- Profit before tax to Revenues down from 15.1% to 14.2%

- Current ratio down 34.4% from 1.5 to 1.0

- Total current assets to Total Assets down from 38.9% to 28.2%

- Total Liabilities to EBITDA of 6.9 compares unfavourably with the Joseph Piotroski benchmark of <5. However, it has improved by 4.3% from the previous year's ratio of 7.2.

- Total Liabilities to Operating Cash Flow of 6.7 compares unfavourably with the Joseph Piotroski benchmark of <4. However, it has improved by 2.3% from the previous year's ratio of 6.9.

Note:

- Total revenue steady at $US64.7b

- EBIT to total assets steady at 11.8%

- Total revenue to total assets steady at 0.8

- Cost of Goods Sold to Revenues up from 45.3% to 45.4%

- Sales and marketing expenses to Revenues up from 38.5% to 38.9%

- Intangibles to Total Assets up from 35.8% to 39.5%

Annual Report [Year-on-year comparison: 2018 vs 2017]

Company Name : PepsiCo, Inc. (PEP)
December 2920182017Change
Description$US m$US m(%)
Total Revenue64,66163,525Up 1.8
EBITDA9,1899,602Down 4.3
EBIT9,1899,602Down 4.3
Pre-Tax Profit/(Loss)9,1899,602Down 4.3
Current Assets21,89331,027Down 29.4
Current Liabilities22,13820,502Up 8
Shareholders' Funds14,60210,981Up 33
Total Liabilities63,04668,823Down 8.4
Total Assets77,64879,804Down 2.7
Current Debt4,0265,485Down 26.6
Non-Current Debt28,29533,796Down 16.3
Total Debt32,32139,281Down 17.7
Operating Cash Flow9,41510,030Down 6.1
Net Assets14,60210,981Up 33
Net Tangible Assets(16,031)(17,601)Improved 8.9
AuditorKLMG LLP 

Year-on-year comparison of Per Share figures

December 2920182017Change (%)
Description$US $US
EBIT6.56.7Down 3.6
EBITDA6.56.7Down 3.6
Shareholders' Funds10.37.7Up 33.9
Total Liabilities44.648.3Down 7.7
Total Assets54.956Down 2
Current Debt2.83.8Down 26.1
Non-Current Debt2023.7Down 15.7
Total Debt22.827.6Down 17.1
Net Tangible Assets(11.2)(12.2)Improved 8.1

Year-on-year comparison of Performance Ratios

December 2920182017Change (%)
Return on Equity (%)8644.7Up 92.4
Total Liabilities to EBITDA6.97.2Down 4.3
Total Liabilities to Operating Cash Flow6.76.9Down 2.3
Debt/Equity2.23.6Down 38.3
Total Liabilities/Total Assets0.80.9Down 5.8
Common Size Ratios by Assets %
Total non-current assets to Total Assets 71.8 61.1 Up 17.5
Intangibles to Total Assets 39.5 35.8 Up 10.3
Total current assets to Total Assets 28.2 38.9 Down 27.5
Fixed Assets to Total Assets 22.7 21.6 Up 5.1
Future income tax benefit to Total Assets 5.6 nana
Common Size Ratios by Revenues %
Cost of Goods Sold to Revenues 45.4 45.3 Up 0.2
Sales and marketing expenses to Revenues 38.9 38.5 Up 1.1
Profit before tax to Revenues 14.2 15.1 Down 6.1
Tax expenses to Revenues (5.2) 7.4 Down 170.4

Five-year record of growth and performance:

In the last 5 years Total Revenue averaged $US64.1B, EBITDA averaged $US9.9B and Net Profit averaged $US7.2B. Compound Annual Growth Rate (CAGR) averaged -0.5% for Total Revenue, 13.2% for Net Profit and -6.1% for EBITDA.

DescriptionAnnual ($US B)5-year Avg ($US B)5-year CAGR %
Total Revenue64.764.1(0.5)
EBITDA9.29.9(6.1)
Operating Profit9.29.4(1.3)
Net Profit12.57.213.2

Five-year record of EBITDA, Operating Profit, Net Profit, ROE, ROA and ROCE

In 2018 Net Profit Margin of 19.4% was above its 5-year Avg of 11.2% (All Figures in %)

Description20185-year Avg
EBITDA Margin14.215.4
Operating Profit Margin14.214.6
Net Profit Margin19.411.2
Return on Equity8654.5
Return on Assets16.29.6
Return on Capital Employed16.617.2

SECTION 8 CORPORATE PROFILE

8.1 Activities

PepsiCo, Inc. (PepsiCo) is a global beverage, snack and food company. The Company manufactures, markets and sells a range of salty, convenient, sweet and grain-based snacks, carbonated and non-carbonated beverages and foods approximately 200 countries, with its operations in North America, Mexico and the United Kingdom. The Company is organized in three business units: PepsiCo Americas Foods, which includes Frito-Lay North America, Quaker Foods North America and all of its Latin American food and snack businesses, including its Sabritas and Gamesa businesses in Mexico; PepsiCo Americas Beverages, which includes PepsiCo Beverages North America and all of its Latin American beverage businesses, and PepsiCo International, which includes all PepsiCo businesses in the United Kingdom, Europe, Asia, Middle East and Africa. The Company's three business units were organized in six segments: FLNA, QFNA, LAF, PAB, United Kingdom & Europe, and Middle East, Africa & Asia.

8.2 Top Management

The chief financial officer is Hugh F. Johnston.

8.3 Issued Capital and MCap

Based on 1,401,822,000 issued shares the market capitalisation is $US188.4 billion.

8.4 Vanguard Total World Stock ETF 7489:

The stock was one of 7489 global stocks selected by Vanguard Total World Stock ETF (VT) who sold 260 shares in the period Apr 30, 2019 to May 31, 2019 worth $US-33,341 at an estimated Volume Weighted Average Price (VWAP) of $US128.2364. As at May 31, 2019, the Vanguard Total World Stock ETF held 471,426 shares worth $US60,453,973 or 0.36% by value of the ETF's portfolio [Ranked 34 out of 7489 by value and 9 out of 676 for NASDAQ].

COMPANY IDENTIFIERS

Contact: +1 914 253-2000

Physical Address: 700 Anderson Hill Road, Purchase, NY,10577

State/Province/Country: NY [NY], United States

Country of Incorporation: United States

Industry [NAICS]: 312111

Exchange: NASDAQ

Business Sector: Food & Beverages

Industry Group: Beverages

Economic Sector: Consumer Non-Cyclicals

ISIN: US7134481081

O:PEP; PEP.O

PermID: 4295904718

RIC: PEP.O

CIK: 77476

CUSIP: 713448108

Pepsico Inc, Pepsico, Inc

Source: www.BuySellSignals.com