PepsiCo: How Beta Can Lead To Alpha

Summary:

• PepsiCo’s stock is trading at a discount to its fair value, making it a prudent addition to portfolios, especially given its low beta statistic.
• The company has a strong track record of growing dividends for 52 consecutive years and returning capital through share repurchases.
• Despite recent challenges, PepsiCo’s diversified business and stable cash flows position it well to navigate current economic conditions.
• Weakness in FLNA and AMESA segments is considered cyclical, not structural, with long-term prospects remaining positive.

Introduction

PepsiCo, Inc. (NASDAQ:PEP) delivered 1.3% organic net revenue growth in Q3 2024 as compared to the 8.8% organic revenue growth in Q3 2023. On a GAAP basis, net revenue contracted 0.6% for the third quarter. As one of the largest companies

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