PepsiCo: Strong Dividend Stock But At A High Price

Summary:

  • PepsiCo offers stable dividends and a strong product portfolio, but its high price/book ratio makes it a pricey investment currently.
  • The company has substantial long-term debt and a current ratio of 0.83, indicating a need to improve its cash position.
  • PepsiCo faces significant competition domestically and internationally, necessitating heavy marketing investments and growth in emerging markets.
  • Despite a solid dividend yield of over 3%, the high premium to book value suggests holding rather than buying for income investors.

Ice cubes in soda

Jonathan Knowles

When you’re an income investor, one of the key attractive features is dividend stability. It’s nice to have a company that has an iconic product, and steady income that will allow them to maintain a dividend payout at or above

Cash and Equivalents

$6.3 billion

Total Current Assets

$25.7 billion

Total Assets

$99.5 billion

Total Current Liabilities

$31.1 billion

Long Term Debt

$36.6 billion

Total Liabilities

$79.9 billion

Total Shareholder Equity

$19.4 billion

2021

2022

2023

2024 (1H)

Net Revenue

$79 billion

$86 billion

$91 billion

$41 billion

Gross Profit

$42 billion

$46 billion

$49 billion

$23 billion

Gross Margin

53.2%

53.5%

53.8%

55.3%

Operating Income

$11.1 billion

$11.5 billion

$12.0 billion

$6.8 billion

Operating Margin

14.1%

13.4%

13.2%

16.6%

Net Income

$7.6 billion

$8.9 billion

$9.1 billion

$5.1 billion

Diluted EPS

$5.49

$6.42

$6.56

$3.71


Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.


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