Alex Wintringham, Paul Muratore, Pratith Mehta, Sean Pousley, Steph Edwards

Company Description• 1898: Caleb Bradham created Pepsi-Cola• 1965: Merger between Pepsi-Cola Company and Frito Lay• 2007: Indra Nooyi appointed CEO

– Sustainability for humans & the environment– Growing and maintaining the company’s talents and performance

Company Description• 2nd largest distributor of soft drinks and other beverages in the world

– Pepsi-Cola, Diet Pepsi, Mountain Dew, Sierra Mist, Naked Juice, SoBe, Aquafina, Tropicana, Gatorade

• Largest food company in terms of revenue in America– Quaker Oats, Doritos, Fritos, Cheetos, Tostitos, Lays

Company Statistics● Worth $29 Billion● Employs over 150,000

people● Exists in nearly 200

countries● Offers more than 500

different snacks and beverages

SWOT AnalysisStrengths● Brand Awareness● Product Diversity● Money from sponsorships & product

placement.Weaknesses● Legal cases resulting in great amounts of

unwanted publicity● Joyce & Voigt v. PepsiCo

● Lack of marketing compared to Coca-Cola

SWOT AnalysisOpportunities● Product diversity● Taking Advantage of Technology● Offer Healthier Products

Threats● Increased Competition● Increase in Taxes & Changes in Tax Code● Changing Economic Conditions ● Employee Retention● Keeping up with Technology

Stock Price Analysis● The Last 10 years:

○ The average standard deviation for PepsiCo’s rate of return is 14.2%, which is lower than the S&P 500’s standard deviation of 18.4%.

○ The average rate of return over the past ten years is 9.6%, which is higher than the S&P 500’s rate of return of 7%.

Source: Yahoo! Finance

Stock Price Analysis• 2008 Recession:

– PepsiCo’s rate of return was -26% (significant decrease)– S&P 500’s rate of return of -38.5%

• Currently:– Higher rate of return and a comparatively lower risk than the S&P 500– Noticeable volatility in PepsiCo’s stock in short term

INVEST!

Company Financial Analysis

EPS Return on Sales

Return on Equty

Return on Assets

Debt to Equity Ratio

Inventory Turnover Ratio

Current Ratio

Quick Ratio

4.32 .1 .28 .28 2.18 19.48 1.24 1.05

increased stable decreased same decreased increased increased increased

• No Areas of Serious Concern• Should Remain a Strong Competitor

Vs.Pepsi Coke

Return on Equity: 0.28 0.26Return on Assets: 0.1 0.1

Net Profit Ratio: 0.1 .18EPS Ratio: 4.09 1.91 Debt to Equity Ratio: 2.33 1.60 Inventory Turnover Ratio: 18.4 14.7

Current Ratio: 1.10 1.09Quick Ratio: 0.9 0.97

Asset Management

Profitability

Leverage

Liquidity

Current NewsCaramel coloring chemical linked to cancer found in "too high" levels in some colas

● Artificial chemical 4-methylimidazole (4-MeI) is used to give a caramel coloring to different products

● 15,000 cases of cancer in the U.S. alone

● Must legally put a warning label on products that contain more than 29 micrograms of 4- MeI

● 4-Mel in Pepsi One ranged between 39.5 micrograms and 195.3 micrograms.

● The cans purchased in California did not have the warning label printed on the can

Current NewsPepsi plans “Made with real sugar” offering

● Summer of 2014 – three different soft drink products that use real sugar

● Pepsi, Pepsi Vanilla, Pepsi Wild Cherry

● Jones Soda and Zevia used real sugar since 1995

● Skepticism – sugar is a source of diabetes and obesity

Current NewsPeltz blasts PepsiCo again, seeks details on operations, strategy

● Nelson Peltz (Trian Fund Management) owns 1% of Pepsi

● Urging Pepsi to separate their food and beverage sectors into two separate companies

● Other shareholders feel the same way

● Pepsi’s managers and board are not willing to split the company

Conclusion - Issues• Healthier Consumers• Competition with Coca-Cola and other companies• Low profit

– Pepsi: 10%– Coca-Cola: 19%

• High Debt to Equity Ratio– Pepsi: 2.33– Coca-Cola: 1.6

Conclusion - Opportunities • Snack Food Industry• High Earnings per Share Ratio

– Average: 4.09• Improve Quick Ratio

– Average: .9• Decrease Debt to Equity Ratio

– Average: 2.33