Pepsi-Co is a non-alcoholic beverages company in the United States established in 1965 and has grown over the years to become a significant player in the industry. The company has more than 23 products in its portfolio and operates in more than 200 countries. Financial analysis of the company revealed strong performance in the year with rising revenues and net income. A rising trend in key business metrics such as return on equity signifies increasing profitability. In the 2019 financial results, the company attained a ROE of 86 per cent which is above its main competitor, Coca-Cola and the industry average whose ROEs for the year were 44.6 per cent and 33.8 per cent. Pepsi-Co dividends are projected to grow at a constant rate of 8.45 per cent in the next five years supported by the rising profitability. A declining trend was noted liquidity as well as on the financial leverage ratios whose decline was attributed to increased uptake of debt capital. Efficiency ratios showed a general decrease, the only area Pepsi-Co performed poorly as compared to Coca-Cola and the industry average. The company has continued to grapple with rising operating costs that impacted profoundly on profitability, thus eroding the gains on increased sales revenue. An analysis of the stock revealed an overvalued stock since the company’s intrinsic value of $75 is below the market valuation of $133 in July 2020. As a market analyst, I predict continued growth in the company’s revenues in 2020 with further projected growth of 4 per cent in the year after. I recommend a buy and hold strategy for investors based on healthy dividend and the rising market valuation.The stock expected to hit a high of $156 in 2020 as sustained strong investor demand exert upward pressure on the stock’s price.
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