October 24, 2024
Top 10 Stock PepsiCo Hold Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: PepsiCo – Top 10 Stock in S&P 500 Consumer Staples Index
PepsiCo is listed as a top 10 stock on October 24, 2024 in the market index S&P US Consumer because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company is growing above average, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 29 (29% performer), Obermatt assesses an overall hold recommendation for PepsiCo on October 24, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Soft Drinks |
| Index | Diversity USA, Human Rights, NASDAQ 100, NASDAQ, S&P US Consumer, S&P US Food & Beverage, S&P 500 |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View PepsiCo Hold
| 360 METRICS | October 24, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 31 |
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| GROWTH | ||||||||
| GROWTH | 61 |
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| SAFETY | ||||||||
| SAFETY | 33 |
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| SENTIMENT | ||||||||
| SENTIMENT | 43 |
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| 360° VIEW | ||||||||
| 360° VIEW | 29 |
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ANALYSIS: With an Obermatt 360° View of 29 (better than 29% compared with alternatives), overall professional sentiment and financial characteristics for the stock PepsiCo are below the industry average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for PepsiCo. The consolidated Growth Rank has a good rank of 61, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. It ranks higher than 61% of competitors in the same industry. The other indicators are below average, namely the Value, Safety, and Sentiment Ranks.The Value Rank at 31 means that the share price of PepsiCo is on the high side compared with its peers regarding revenues, profits, and invested capital. The stock price is higher than for 69% of alternative stocks in the same industry. The consolidated Safety Rank has a riskier rank of 33, which means that the company has a riskier financing structure than 67% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. The consolidated Sentiment Rank also has a low rank of 43, indicating professional investors are more pessimistic about the stock than for 57% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 29, PepsiCo is worse than 71% of all alternative stock investment opportunities based on the Obermatt Method. As only one of the consolidated Obermatt Ranks exhibits excellent performance, namely the above-average growth (Growth Rank of 61), it is a riskier stock investment proposition. Aside from the critical professional market sentiment (Sentiment Rank of 43), the company is rather risky when it comes to financing (Safety Rank of 33). The negative market view on PepsiCo may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to join the party, they may drive stock prices above reasonable levels. While it is typical for growth companies to have low value, because investors are willing to pay more for companies that are expected to have high growth, the crucial question is: how much more do you pay for the stock of PepsiCo compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one minus the growth rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value (even though it is lower than 50). As market sentiment is critical, you should be careful with paying more than market-average for this stock and conduct further research into the company's future growth potential. ...read more
Sentiment Strategy: Professional Market Sentiment for PepsiCo only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 43 (better than 43% compared with alternatives), overall professional sentiment and engagement for the stock PepsiCo is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half the indicators below and half above average for PepsiCo. Analyst Opinions are at a rank of 41 (worse than 59% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 29, which means that stock research experts are getting even more pessimistic. In addition, the Professional Investors rank is 49, which means that professional investors hold less stock in this company than in 51% of alternative investment opportunities. Pros tend to invest in other companies. The only positive sentiment indicator for PepsiCo is Market Pulse, with a rank of 66, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 66% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 43 (less encouraging than 57% compared with investment alternatives), PepsiCo has a reputation among professional investors that is below that of its competitors. This is an ambiguous picture: analysts are negative and getting even more critical while the news in the market is positive. Who should investors believe? This is a difficult question in such a situation. Investors should proceed cautiously and verify not only the financial performance in the Obermatt Value, Growth and Safety Ranks but also independent news coverage of the company. ...read more
Value Strategy: PepsiCo Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 31 (worse than 69% compared with alternatives), PepsiCo shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for PepsiCo. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 75% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales is 25 which means that the stock price compared with what market professionals expect for future profits is higher than 75% of comparable companies, indicating a low value concerning PepsiCo's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 36 which means that the stock price compared with what market professionals expect for future profit levels is higher than 64% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 3 is also low. Compared with invested capital, the stock price is higher than for 97% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 31, is a hold recommendation based on PepsiCo's stock price compared with the company's operational size and dividend yields. Should dividend investors pick PepsiCo? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose PepsiCo only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: PepsiCo Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 61 (better than 61% compared with alternatives), PepsiCo shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with all four indicators above average for PepsiCo. Sales Growth has a value of 52, which means that, currently, professionals expect the company to grow more than 52% of its competitors. The same is valid for Profit Growth with a value of 57 and for Capital Growth with 56. In addition, Stock Returns had an above-average rank value of 57, which means they have been higher than 57% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 61, is a buy recommendation for growth and momentum investors. Since all Growth Ranks are positive, PepsiCo exhibits above-average growth momentum. This could be due to a uniquely strong market position, proprietary technology, or an extensive corporate acquisition strategy. Growth investors will find this an attractive investment opportunity, unless they expect that the current phase is transitory and will deteriorate in the future. The current performance could also be a temporary recovery from a very low point, such as a turn-around situation. In the case of a turn-around, the current performance may or may not be followed by a continuing positive development. ...read more
Safety Strategy: PepsiCo Debt Financing Safety below-average
| SAFETY METRICS | October 24, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 6 |
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| REFINANCING | ||||||||
| REFINANCING | 23 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 83 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 33 |
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ANALYSIS: With an Obermatt Safety Rank of 33 (better than 33% compared with alternatives), the company PepsiCo has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of PepsiCo is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for PepsiCo. Liquidity is at 83, meaning the company generates more profit to service its debt than 83% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 23, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 77% of its competitors. Leverage is also high at a rank of 6, which means that the company has an above-average debt-to-equity ratio. It has more debt than 94% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 33 (worse than 67% compared with alternatives), PepsiCo has a financing structure that is riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: PepsiCo Below-Average Financial Performance
| COMBINED PERFORMANCE | October 24, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 31 |
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| GROWTH | ||||||||
| GROWTH | 61 |
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| SAFETY | ||||||||
| SAFETY | 83 |
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| COMBINED | ||||||||
| COMBINED | 31 |
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ANALYSIS: With an Obermatt Combined Rank of 31 (worse than 69% compared with investment alternatives), PepsiCo (Soft Drinks, USA) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of PepsiCo are low in value (priced high) with a consolidated Value Rank of 31 (worse than 69% of alternatives), and are riskily financed (Safety Rank of 33, which means above-average debt burdens) but show above-average growth (Growth Rank of 61). ...read more
RECOMMENDATION: A Combined Rank of 31, is a hold recommendation based on PepsiCo's financial characteristics. As the company PepsiCo shows low value with an Obermatt Value Rank of 31 (69% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 61% of comparable companies (Obermatt Growth Rank is 61). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 33 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for PepsiCo, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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