November 14, 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 Food & Beverage Index
PepsiCo is listed as a top 10 stock on November 14, 2024 in the market index S&P US Food & Beverage because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is growing above average and professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 42 (42% performer), Obermatt assesses an overall hold recommendation for PepsiCo on November 14, 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 | November 14, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 33 |
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| GROWTH | ||||||||
| GROWTH | 57 |
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| SAFETY | ||||||||
| SAFETY | 31 |
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| SENTIMENT | ||||||||
| SENTIMENT | 65 |
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| 360° VIEW | ||||||||
| 360° VIEW | 42 |
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ANALYSIS: With an Obermatt 360° View of 42 (better than 42% 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 half of the metrics below and half above average for PepsiCo. The consolidated Growth Rank has a good rank of 57, 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. This means that growth is higher than for 57% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 65, which means that professional investors are more optimistic about the stock than for 65% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 33, which means that the share price of PepsiCo is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 67% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 31, which means that the company has a financing structure that is riskier than those of 69% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 42, PepsiCo is worse than 58% of all alternative stock investment opportunities based on the Obermatt Method. Only half of the consolidated Obermatt Ranks exhibit excellent performance, so one needs to take a close look. Growth is above-average (Growth Rank of 57), and professional market sentiment is positive (Sentiment Rank of 65), but value and safety are below average. The Safety Rank is the least significant of the four consolidated ranks, because it only reflects financing practices. In the case of high growth, aggressive financing is a good thing. So the question is: How to assess below-average value against above-average growth and sentiment? Growth may be the strongest driver of the investment rationale in this case, which is reflected in institutional investors' opinions. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much do you sacrifice value for growth? You can use the following rule of thumb: If you take 100 minus the growth rank, you arrive at a possibly minimum level for the value 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 if the growth rank is above 60. Sometimes market sentiment just extrapolates the past, but sometimes it reflects reality. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for PepsiCo positive
ANALYSIS: With an Obermatt Sentiment Rank of 65 (better than 65% compared with alternatives), overall professional sentiment and engagement for the stock PepsiCo is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for PepsiCo. Analyst Opinions are at a rank of 42 (worse than 58% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 50, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in PepsiCo. Even better, the Professional Investors rank is 64, meaning that professional investors hold more stock in this company than in 64% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 66, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 66% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 65 (more positive than 65% compared with investment alternatives), PepsiCo has a reputation among professional investors that is above-average compared with that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: PepsiCo Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 33 (worse than 67% 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 79% 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 27 which means that the stock price compared with what market professionals expect for future profits is higher than 73% 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 33 which means that the stock price compared with what market professionals expect for future profit levels is higher than 67% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 1 is also low. Compared with invested capital, the stock price is higher than for 99% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 33, 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
| GROWTH METRICS | November 14, 2024 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 54 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 61 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 49 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 49 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 57 |
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ANALYSIS: With an Obermatt Growth Rank of 57 (better than 57% 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 half of the indicators below and half above average for PepsiCo. Sales Growth has a rank of 54, which means that, currently, professionals expect the company to grow more than 54% of its competitors. Profit Growth with a rank of 61 is also above average. But Capital Growth has only a rank of 49, and Stock Returns with 49 are also below-average. Stock returns for PepsiCo have recently been below 51% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 57, is a buy recommendation for growth and momentum investors. Are investors forecasting troubles based on the lack of operating investment activity at the company? This could be one explanation as to why stock returns are low. But stock returns can also be the result of correcting an error in the past, in this case, an overly optimistic outlook on the future, which is now more realistic. The Value Ranks may confirm such a picture. The more important growth indicators are revenues and profits, which are both above average for PepsiCo. This is a positive sign from the company's operational side and may give investors courage, despite the poor recent stock price performance. ...read more
Safety Strategy: PepsiCo Debt Financing Safety below-average
| SAFETY METRICS | November 14, 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 | 31 |
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ANALYSIS: With an Obermatt Safety Rank of 31 (better than 31% 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 31 (worse than 69% 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 | November 14, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 33 |
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| GROWTH | ||||||||
| GROWTH | 57 |
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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 33 (worse than 67% of alternatives), and are riskily financed (Safety Rank of 31, which means above-average debt burdens) but show above-average growth (Growth Rank of 57). ...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 33 (67% 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 57% of comparable companies (Obermatt Growth Rank is 57). 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 31 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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