Analysis of PepsiCo's Growth, Valuation, and New Product Launch

PepsiCo and Beyond Meat introduce new Beyond Meat Jerky product

Mar 30, 2022 at 12:05 PM
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On March 23, PepsiCo, Inc. (NASDAQ:PEP) and Beyond Meat Inc (NASDAQ:BYND) announced the debut of Beyond Meat Jerky. The plant-based jerky is the first product from the two companies' joint-venture, Planet Partnership, LLC. The jerky product was rolled out at stores in the United States this month.

While Pepsi stock boasts a year-to-date lead of 16.7%, it's still sitting at a 3.8% year-to-date deficit. The equity is well on its way back toward its January highs above the $176 level, staging a bounce off the 320-day moving average, though investors should watch out for the $168 level, which has served as a ceiling since mid-February. 

pep march 30

Now might be a good time to speculate on PEP's next move with options. The stock's Schaeffer's Volatility Index (SVI) of 16% stands higher than just 19% of readings from the past year. In other words, options traders are pricing in relatively low volatility expectations at the moment. 

From a fundamental point of view, PepsiCo provides a relatively safe business model that has produced consistent revenue growth over multiple years. PEP has increased its annual revenues 23% since fiscal 2018. Additionally, the food and beverage company is estimated to grow its revenues 4.2% and its earnings 8.5% for fiscal 2023.

However, PepsiCo's annual net income has only increased 4% since fiscal 2019. PEP also experienced a 42% decrease in net income between fiscal 2018 and fiscal 2019. In addition, PepsiCo stock has a relatively high valuation, trading at a forward price-earnings ratio of 24.51 and a price-sales ratio of 2.86.

Furthermore, PepsiCo holds a very weak balance sheet with $5.99 billion in cash and $42.38 billion in total debt. Still, the company’s essential business model and its dividend yield of 2.59% make PepsiCo stock a viable option for dividend investors looking to retain their wealth, more so than grow at a significant rate.

 

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