PepsiCo (PEP) Pushes New Growth Moves As The Undervalued Debate Stays Open

PepsiCo (PEP) has rolled out a cluster of fresh moves that speak directly to how the business is trying to grow, from sugar free drinks to cleaner logistics and new restaurant pouring rights.

Despite these moves, PepsiCo’s recent trading has been soft, with the share price down 9.9% year to date to US$128.15 and the 1 year total shareholder return declining 4.7%. By comparison, the 3 and 5 year total shareholder returns of 15.8% and 0.2% show that momentum has been fading rather than building.

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PepsiCo now trades well below both analyst targets and one estimate of intrinsic value. The real issue is whether that gap reflects mispricing or a fair reset of expectations.

Most Popular Narrative: 36% Undervalued

PepsiCo’s most followed narrative pegs fair value at $200.01 a share, well above the last close at $128.15. This places the stock firmly in the “growth and income” camp rather than a high growth story.

PepsiCo [PEP] is a classic *growth + income* compounder, not a high growth stock.

It is not going to double in 2 years. It is a low volatility anchor that pays you to wait.

See why 9 investors see PepsiCo as 36% undervalued.

Result: Fair Value of $200.01 (UNDERVALUED)

Still, PepsiCo’s income story relies on consumers continuing to buy sugary drinks and salty snacks, and on PepsiCo Foods North America easing current growth pressure.

Find out about the key risks to this PepsiCo narrative.

Next Steps

Mixed views on PepsiCo so far. Take a closer look at the numbers, weigh the concerns against the potential upsides, and judge the 5 key rewards and 1 important warning sign.

Looking for more investment ideas beyond PepsiCo?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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