PepsiCo: Should Investors Be Concerned Over Declining Volumes?

Nov. 17, 2023 3:19 PM ETPepsiCo, Inc. (PEP) Stock, , , 24 Comments
YR Research
4.21K Followers

Summary

  • PepsiCo has underperformed the market year to date and by a significant margin.
  • The combination of shifting market sentiment and worries about declining volumes has led the stock to a historically low valuation.
  • I find the worries overexaggerated, as aggressive price increases and the timing relative to competitors are the main drivers for lower volumes, and these are temporary.
  • Trading at an attractive valuation with ample margin of safety, I rate PepsiCo a Buy.
Can of 7 Up drink on ice isolated on white

darios44/iStock Editorial via Getty Images

PepsiCo (NASDAQ:PEP), one of the largest staples suppliers in the world in terms of revenue, reported third-quarter results that beat expectations, with EPS of $2.25 beating by $0.10, and revenue of $23.45B coming in inline.

PepsiCo's results were quite impressive, which

This article was written by

4.21K Followers
I aim to invest in companies with perfect qualitative attributes, buy them at an attractive price based on fundamentals, and hold them forever. I hope to publish articles covering such companies approximately 3 times per week, with extensive quarterly follow-ups and constant updates.I manage a concentrated portfolio targeted at avoiding losers and maximizing exposure to big winners. This means that often I'll rate great companies at a 'Hold' because their growth opportunity is below my threshold, or their downside risk is too high.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of PEP either through stock ownership, options, or other derivatives. 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.

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