Should I Buy PepsiCo (PEP)? Finance YouTuber Analysis

Sven Carlin advises against investing in PepsiCo, arguing that its business model is no longer sustainable. He highlights stagnating revenues, increasing debt levels, and a negative free cash flow after accounting for capital expenditures, acquisitions, and shareholder returns (dividends and buybacks). He concludes that the stock offers a low reward for a relatively high risk, with an expected return of only 4-6% at best, and suggests better opportunities exist elsewhere.

“Therefore, Pepsico, if I would look at our table, I would put it here. So, the reward is low. The risk is relatively high compared to others. Therefore, it's not an investment that I would say, "Oh, wow, this is it."”

The analyst bought Pepsico in January and views it as an attractive dividend stock. They highlight its 54-year dividend growth streak, current dividend yield above its 10-year average, and a current valuation that is below its historical average, suggesting it's a good entry point despite recent underperformance.

“Seit 54 Jahren steigert Pepsio die Dividende, die momentan bei 3,6% liegt. Auch hier wieder ist das viel, ist das wenig. Und du siehst, wir liegen ebenfalls hier überm 10 Jahreschnitt, also ist quasi schon überdurchschnittlich hoch auch für Pepsi Kurverhältnisse.”

The YouTuber bought PepsiCo due to its status as a dividend aristocrat with a current yield of nearly 4% and a projected annual return of over 10% from dividends and capital appreciation. He notes the stock is currently undervalued based on its P/E ratio compared to its 10-year average, and anticipates free cash flow growth as a major investment cycle concludes, which will better cover the dividend. He also sees potential for efficiency gains from AI.

“Das ist jetzt die Nummer 3, also Pepsi Co, das ist keine unbekannte, jeder, also du garantiert kennst dich natürlich auch momentane Dividenden davon knapp ab 4%.”

The YouTuber sees PepsiCo as a potentially undervalued stock, noting its current trading at a discount compared to its 10-year average multiples. Despite recent operational challenges and an activist investor pushing for changes, he believes the stock offers a clear undervaluation and a good alternative to Unilever for dividend investors.

“Also wir hatten ja jetzt mit Unilever und Pepsico zwei Aktien gehabt eigentlich auch mit American Tower schon drei Aktien gehabt die alle relativ für hohe Dividenden stehen.”

The YouTuber bought Pepsi after selling Nestle, viewing it as a classic dividend stock. Despite an initial price drop after his purchase, recent quarterly results, particularly strong international organic growth, have led to a rebound. He notes its current dividend yield is still relatively high, making it an attractive long-term holding.

“Pepsi hatte ich gekauft gehabt wie gesagt einmal im Januar. Müss ich jetzt noch mal kurz schauen, wann es wirklich war. 6. Januar, also das Jahr war noch ganz jung. Also hier einmal gekauft und dann noch einmal nachgekauft. Hier am 17.03.”

The YouTuber considers Pepsi a buy, noting its current undervaluation with a P/E significantly below its 10-year average. Despite headwinds from rising raw material costs, potential tariffs, and a 'Make America Healthy Again' campaign impacting sales of unhealthy products, Pepsi remains a quality dividend aristocrat. The free cash flow covers the dividend, and the company is adapting its product portfolio, suggesting a potential recovery if management navigates these challenges effectively.

“Wenn es bei mir um hohe Dividenden geht, da gehe ich da auch viel auf Reeds. Tabak habe ich auch mit Philip Morris. Gut, es ist mittlerweile keine hohe Dividende mehr, weil die Aktie schon zu stark gestiegen ist. S Luxusproblem Rfwah.”

The YouTuber considers PepsiCo to be attractively valued, with its dividend yield at an all-time high and a low forward P/E ratio. Despite recent challenges in the US market due to inflation and supply chain issues, the company is expected to improve its performance, especially in the US, which should drive the stock price higher. The YouTuber suggests initiating a position for long-term gains.

“also ich schalte ik für günstig bewertet und hier was muss passieren damit der Aktienkurs deutlich anzieht ich denke vor allem US Geschäft sollte es wieder runter laufen und ich bin ganz zuversichtlich dass pepsic Co das irgendwann hinkriegt also wer hier ein bisschen Ausdauer hat könnte hier schon in der ersten trche beispielsweise einsteigen aus meiner Sicht ich habe auch PepsiCo im Depot auch im stdepot übrigens”

The YouTuber identifies PepsiCo as a quality stock currently available at a good price, with its dividend yield at an all-time high of 3.6%. He notes the stock's recent underperformance due to consumer sentiment and rising raw material costs but believes these issues are temporary. He points to the company's attractive valuation multiples, which are below its long-term average, suggesting significant catch-up potential.

“die Aktie ist jetzt wirklich günstig bewertet und ich vermute dass da nichts so anbrennen soll”

PepsiCo is highlighted as a top pick due to its current dividend yield of 3.5%, which is an all-time high, making it attractive for income investors. The company is a dividend aristocrat with stable growth in dividends and earnings. Despite recent issues like a factory closure and volume declines due to inflation-driven price increases, the YouTuber believes these are temporary and the company's strong market position and pricing power will ensure continued profitability. The stock is currently undervalued, trading at a P/E of 18.5 compared to its 10-year average of 22.5, offering an expected annualized return of 13% over the next two years.

“wir haben momentan ein KGV die Bewertung der Aktie wie hier während des Coron Crash aus meiner Sicht schon interessant”

The analyst views PepsiCo as an interesting entry point due to its secure dividend yield of 3.1% and a current valuation that has moved into undervalued territory. Despite past challenges with inflation and rising costs, the company effectively managed margins through price increases, and analysts expect a clear reduction in its P/E ratio as earnings are projected to rise while the stock price has remained sideways.

“jetzt hätten wir hier eine erwartete Rendite im Jahr von knapp 13% für eine Aktie wie Pepsi Cola ist Pepsi pepsiola ja für Pepsi Co und es ist natürlich schon wie ich finde erstmal attraktiv”

The analyst recommends buying PepsiCo now, citing its recent price drop due to 'Ozempic shock' as an opportunity. Despite concerns, management sees no negative trend, and the company reported strong organic revenue and adjusted earnings growth, with raised forecasts. The dividend yield is attractive at 3%, and it's a dividend aristocrat with 51 years of increases, making it suitable for dividend-focused investors.

“PepsiCo ist die Aktie, die wäre jetzt für mich tatsächlich im Kauf.”

The YouTuber expresses caution regarding Pepsi, similar to Coca-Cola, due to its current high valuation. He argues that while it's considered a 'safe haven,' its growth prospects are significantly lower than tech companies, and its current price may not leave much room for substantial long-term returns. He also highlights its vulnerability to supply chain disruptions and inflation, which directly impact its cost structure.

“ich wäre vorsichtig jetzt ein großteil des vermögens da rein zu schieben weil ich mir sage ja das ist das sichere hafen weil die bewertung sind da ist schon wieder so hoch dass ich nicht glaube dass man da ist noch unbedingt viel rendite mit macht und vielleicht gibt es dann auch da eine korrektur”

The YouTuber advises against Pepsi, noting its P/E ratio of 25.6 despite minimal revenue growth (1.7% recently) and flat earnings over the past 13 years. He highlights declining sales volume, with revenue growth driven solely by price increases, indicating a lack of underlying business expansion.

“So Pepsi's underlying business and profitability is not really growing at all. Now, another interesting thing about Pepsi is their sales volume has been declining since 2022 and its revenue has only been growing because it's been able to continue increasing its prices.”

The YouTuber advises avoiding Pepsi due to its high valuation (P/E of 27, P/FCF of 28) despite minimal revenue growth (3% annually over the past decade, with recent declines). He argues that such high multiples are only justified by much higher growth rates, which Pepsi lacks, making it very expensive.

“28 multiples for zero growth is very very expensive.”

PepsiCo is unlikely to benefit from new guidelines that warn against sugar and processed foods. The company's significant expansion into snacks, which are often highly processed and sugary, positions it unfavorably.

“Uh we also have PepsiCo, ticker PEP, and Coca-Cola, ticker KO, probably not going to be helped by these new guidelines. first against the uh the the warnings against sugar and lower sugar consumption. Also, processed foods in their snacks.”

The YouTuber suggests Pepsi for its 3.2% dividend yield and long-term value, noting its diversification across snacks and beverages. The company has a 52-year history of dividend increases and is expected to return to 3-5% annual revenue growth. While recent earnings have fallen due to inflation, the payout ratio is manageable for a stable company.

“Pepsi offers the higher dividend yield and a better value in the shares the company is also better Diversified across snacks and its Quaker breakfast brand”

The analyst prefers PepsiCo over Coca-Cola due to its significant diversification beyond soft drinks, particularly its leading position in the global snacks market which accounts for over half its revenue and is growing faster. This diversification spreads risk and supports a higher annual dividend growth rate compared to Coca-Cola, with a slightly better payout ratio.

“not only does it spread the risk around a little so if the soft drink segment weakens a little bit maybe on new regulations for sugar content it still has that snack segment to carry it along but also because the snack segment is growing at a faster rate as well”

The analyst gives the edge to Pepsi over Coca-Cola primarily due to its better diversification across product categories, with over half of its revenue coming from the snacks segment in addition to beverages. This diversification is seen as reducing risk and providing a more stable growth profile compared to Coca-Cola's heavier reliance on carbonated soft drinks.

“But just on that diversification in product categories I Gotta Give the edge to Pepsi on this one.”

PepsiCo is highlighted for its strong fundamentals, outperforming the market, and consistent dividend growth. Its diversification across snacks and beverages, continuous innovation in the industry, and efficient use of data analytics make it a consistent blue-chip that can protect portfolios during a recession, despite high debt levels.

“this is one of the most consistent Blue Chips out there and is going to help protect your portfolio through a research”

The YouTuber prefers Pepsi over Coca-Cola due to its valuation and better sales mix, with half of its sales and 65% of profits coming from its higher-profitability snack division. Pepsi also offers a similar dividend yield and trades at a more attractive 2.9 times sales compared to Coca-Cola's nearly seven times sales.

“i've got to go with pepsi ticker pep for its valuation and better sales mix between snacks and beverages the company books half of its sales and 65 of its profits from the snack division switch which means they're higher profitability than that beverage component plus shares offer the same dividend yield and trade for just 2.9 times sales versus a valuation of almost seven time sales for shares of coca-cola”

The analyst suggests buying Pepsico due to low expectations for its upcoming earnings report, making it likely to beat estimates. Despite operating margin challenges, its stable gross margin indicates strong pricing power. The stock trades at a lower price-to-sales multiple compared to Coca-Cola, suggesting it is relatively cheap.

“I just think the expectations are low enough for Pepsi that it is going to be able to easily beat those expectations on sales on earnings it's very cheap.”

The analyst advises avoiding PepsiCo stock due to significant cash flow problems, growing debt, and a stagnant business portfolio. He argues that the company's free cash flow is entirely consumed by its dividend, hindering its ability to fund necessary acquisitions for growth. The analyst suggests the stock is overvalued and would only consider it if it drops to around $100 per share or if the company addresses its financial issues by cutting the dividend.

“I wouldn't touch this stock unless it's singledigit EVA mult market multiple or they cut the dividend and they start taking their cash flow situation very seriously. So look for this stock to continue to fall. I would peg it around $100 to where you take a look at it.”

The analyst argues that PepsiCo is wildly overvalued, trading at 20 times EBITDA for a business with only 2% earnings growth and 1% cash flow growth over the last decade, which is below the inflation rate. He calculates a 10-year IRR of 3.2%, significantly lower than the risk-free 10-year U.S. Treasury yield of 5%, making it an unattractive investment on a risk-adjusted basis. The current valuation is largely due to market multiple expansion rather than fundamental growth.

“I think this stock is indicative of a market that could collapse not collapse you know it's not like the meme stocks the world is coming to an end just it's going to price adjust and if you price adjusted this company by going from 20 times to say 15 times you're going to wipe off billions of dollars of equity in the stock market very very quickly so be very careful what you buy do the fundamental analysis for yourself find a company you're going to own for 10 20 30 years or hold cash and wait for the market decline remember cash is an option on the future so there's nothing wrong of holding I know that there's some inflation out there but I'd rather take a five six percent um loss on the purchase purchasing power of my cash and avoid a 20 or 30 percent decline in the stock market especially if the stock market is declining you won't have cash to be able to take advantage of that anyways that's what's Food For Thought let's review the five key attributes for PepsiCo number one top line revenue growth yes check the box number two EBA dog growth check the box number three strong free cash flow yes number four low debt yes number five well priced no it is not PepsiCo is an example of how the stock market itself is wildly overvalued in my opinion and it deserves uh some time to cool off.”

The analyst recommends avoiding Pepsi unless it's at a 'no-brainer' price, citing declining revenue and earnings per share. The company's pricing power and market position have been eroded by the internet, and tariffs are expected to cause flat earnings growth, making its current valuation of 21x trailing earnings expensive for a non-growing business.

“If you're not getting Pepsi at a no-brainer price where you're going to be able to generate an easy return, I think this is one of those stocks to just avoid.”

The YouTuber argues that Pepsi, despite being a large brand, has underperformed the market over the last decade. This is attributed to the internet changing consumer demand and distribution, leading to increased competition from smaller brands and reduced pricing power for established players. He believes this trend will continue, making it a poor long-term investment.

“these phenomenal Brands the companies that own these brands have underperformed the stock market overall over the past decade why is that”