With PepsiCo (PEP) set to purchase one of Russia’s largest dairy and juice companies, OAO Wim-Bill-Dann (WBD), we examine the contribution of the international market shares for the most valuable business segments for PepsiCo and Coca Cola (KO).
Pepsi is the world’s second largest carbonated soft drink manufacturer behind Coke, and the largest packaged foods product manufacturer. The two companies compete across virtually all drink categories.
Pepsi: The chart above examines the importance of Pepsi’s international presence, through the Frito-Lay brand, to the company’s stock value. While we currently project a 100 basis point increase in Frito-Lay’s international market share between 2010 and 2013 to almost 37%, our analysis reveals a nearly 1% Pepsi stock price sensitivity to any 100 basis point change in 2013 market share beyond our estimates.
We estimate a stock value of $67.28 for PepsiCo, close to 3% beyond the current market price.
Coke: Comparatively, we examine the international presence of Coca Cola’s two largest segments, its Coca Cola and Diet Coke brands, which generate an estimated 44% of the company’s stock value (27% and 17% respectively). We estimate relatively stable international market shares for these products in the years ahead. The charts below examine the impact on Coca Cola’s stock value to shifts in these products’ market shares, showing a 2% price sensitivity to a 100 basis point change in our 2013 estimates.
We estimate Coca Cola’s intrinsic stock value at $59.94, about 8% below the current market price.
Although Coca Cola’s stock value still remains much more sensitive to international operations, PepsiCo’s push to expand its presence overseas could add further upside to our current price estimate of $67.28, which stands roughly 3% ahead of current market value.
Disclosure: No position