PEP
PEP
ACCUMULATE 2026-03-07
Model
DDM
Price at Report
$159.43
Base IV
$161.86
Bear IV
$118.45
Bull IV
$205.61
Entry Zone: 124-149 · Sell Above: 175
Bore Family Office
Valuation Report — PepsiCo (PEP) • March 7, 2026
3-Stage DDM (Ke) • Discount Rate: 7.15% • Current Price: $159.43
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
PepsiCo, founded in 1965 through the merger of Pepsi-Cola and Frito-Lay, is a global food and beverage giant with ~$94B in revenue across ~200 countries. The company operates through 7 divisions: Frito-Lay North America (~27% of revenue, ~40% of operating profit — the crown jewel), Quaker Foods North America (~5%), PepsiCo Beverages North America (~23%), Latin America (~10%), Europe (~19%), Africa, Middle East & South Asia (~9%), and Asia Pacific, Australia/New Zealand & China (~7%). Frito-Lay's snack dominance (Lay's, Doritos, Cheetos) provides enormous pricing power and margin stability. FY2025 revenue grew 2.3% organically but volume declined as consumers pushed back on cumulative pricing. Management guided for mid-single-digit organic revenue growth in FY2026. Net debt of $39.7B is significant but well-supported by $15.7B EBITDA (2.5× leverage).📊 Financial Snapshot
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $79,474 | $86,392 | $91,471 | $91,854 | $93,925 |
| EBITDA ($M) | $14,377 | $14,792 | $15,504 | $16,702 | $15,676 |
| Operating Income ($M) | $11,162 | $11,512 | $11,986 | $12,887 | $11,498 |
| Net Income ($M) | $7,618 | $8,910 | $9,074 | $9,578 | $8,240 |
| EPS (diluted) | $5.49 | $6.42 | $6.56 | $6.95 | $6.00 |
| Free Cash Flow ($M) | $6,991 | $5,604 | $7,924 | $7,189 | $7,672 |
| Annual DPS | $4.247 | $4.525 | $4.945 | $5.330 | $5.622 |
| Total Debt ($M) | $40,334 | $39,071 | $44,105 | $44,306 | $49,182 |
| Rev YoY Growth | — | +8.7% | +5.9% | +0.4% | +2.3% |
📈 DDM Scenarios
$118
🔴 Bear
$162
📊 Base
$206
🚀 Bull
$159.43
Current Price
$162
Analyst Avg PT
📋 Full 10-Year Projection Tables
Bear Scenario
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $5.791 | $5.404 | $5.40 |
| Year 2 | Stage 1 | $5.964 | $5.195 | $10.60 |
| Year 3 | Stage 1 | $6.143 | $4.994 | $15.59 |
| Year 4 | Stage 1 | $6.328 | $4.800 | $20.39 |
| Year 5 | Stage 1 | $6.517 | $4.614 | $25.01 |
| Year 6 | Stage 2 | $6.680 | $4.414 | $29.42 |
| Year 7 | Stage 2 | $6.847 | $4.223 | $33.64 |
| Year 8 | Stage 2 | $7.019 | $4.039 | $37.68 |
| Year 9 | Stage 2 | $7.194 | $3.864 | $41.55 |
| Year 10 | Stage 2 | $7.374 | $3.696 | $45.24 |
| Terminal | — | TV=$146.05 | PV(TV)=$73.21 (62% of IV) |
Base Scenario
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $5.931 | $5.535 | $5.54 |
| Year 2 | Stage 1 | $6.257 | $5.450 | $10.99 |
| Year 3 | Stage 1 | $6.602 | $5.366 | $16.35 |
| Year 4 | Stage 1 | $6.965 | $5.284 | $21.64 |
| Year 5 | Stage 1 | $7.348 | $5.202 | $26.84 |
| Year 6 | Stage 2 | $7.642 | $5.049 | $31.89 |
| Year 7 | Stage 2 | $7.947 | $4.901 | $36.79 |
| Year 8 | Stage 2 | $8.265 | $4.757 | $41.54 |
| Year 9 | Stage 2 | $8.596 | $4.617 | $46.16 |
| Year 10 | Stage 2 | $8.940 | $4.481 | $50.64 |
| Terminal | — | TV=$221.88 | PV(TV)=$111.22 (69% of IV) |
Bull Scenario
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $6.044 | $5.640 | $5.64 |
| Year 2 | Stage 1 | $6.497 | $5.659 | $11.30 |
| Year 3 | Stage 1 | $6.984 | $5.677 | $16.98 |
| Year 4 | Stage 1 | $7.508 | $5.696 | $22.67 |
| Year 5 | Stage 1 | $8.071 | $5.714 | $28.39 |
| Year 6 | Stage 2 | $8.515 | $5.626 | $34.01 |
| Year 7 | Stage 2 | $8.983 | $5.540 | $39.55 |
| Year 8 | Stage 2 | $9.477 | $5.454 | $45.01 |
| Year 9 | Stage 2 | $9.999 | $5.370 | $50.38 |
| Year 10 | Stage 2 | $10.549 | $5.288 | $55.67 |
| Terminal | — | TV=$299.12 | PV(TV)=$149.94 (73% of IV) |
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 5.1% | $209 | $235 | $271 | $323 | $408 |
| 5.6% | $183 | $202 | $226 | $260 | $310 |
| 6.1% | $162 | $176 | $194 | $218 | $250 |
| 6.6% | $146 | $157 | $170 | $187 | $210 |
| 7.1% | $132 | $141 | $151 | $164 | $180 |
| 7.6% | $121 | $128 | $136 | $146 | $158 |
| 8.1% | $111 | $117 | $123 | $131 | $141 |
| 8.6% | $103 | $108 | $113 | $119 | $127 |
| 9.1% | $96 | $100 | $104 | $109 | $115 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Ticker | Company | P/E | EV/EBITDA | Div Yield | DGY |
|---|---|---|---|---|---|
| PEP | PepsiCo (current) | 26.6x | 13.8x | 3.6% | 54 yrs |
| KO | Coca-Cola | 29.0x | 22.0x | 2.8% | 62 yrs |
| MDLZ | Mondelez | 19.5x | 15.0x | 2.8% | — |
| CPB | Campbell Soup | 13.2x | 11.8x | 3.9% | — |
| HRL | Hormel Foods | 17.4x | 10.5x | 3.8% | 59 yrs |
| PEP | 5-yr avg (own history) | 26.0x | 16.0x | 2.8% | — |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $5.622 |
| Current Yield | 3.57% |
| Consecutive Growth Years | 54 |
| 1-yr DPS CAGR | +5.5% |
| 3-yr DPS CAGR | +4.3% |
| 5-yr DPS CAGR | +5.8% |
| 10-yr DPS CAGR | +7.1% |
| Payout Ratio (DPS/EPS) | 93.7% ⚠️ |
| FCF Payout Ratio | 100.6% ⚠️ |
| Sustainability Verdict | Safe (Watch Payout) ⚠️ |
PepsiCo has raised its dividend for 54 consecutive years — one of the longest streaks in U.S. equity history. The FY2025 payout ratio spiked to 94% EPS (5.62/6.00) due to earnings weakness, not DPS cuts. FCF of $7.7B vs. DPS outflow of ~$7.7B is essentially break-even — manageable given PEP's access to debt markets at favorable rates. Analyst consensus calls for EPS recovery to $8.71 in FY2026, which would bring the payout ratio back to ~65% — comfortable range. Dividend streak is safe; near-term payout requires monitoring until EPS normalizes.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| FY2023 | $6.56 | — | — | — | Actual |
| FY2024 | $6.95 | — | — | — | Actual |
| FY2025 | $6.00 | — | — | — | Actual |
| FY2026E | $8.38 | $8.71 | $9.18 | 24 | Estimate |
| FY2027E | $8.76 | $9.30 | $10.02 | 24 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| FY2023 | $91.5B | — | — | — | Actual |
| FY2024 | $91.9B | — | — | — | Actual |
| FY2025 | $93.9B | — | — | — | Actual |
| FY2026E | $95.5B | $99.5B | $104.6B | 24 | Estimate |
| FY2027E | $98.2B | $102.6B | $109.4B | 24 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $161.79 | Range $140–$182
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Filippo Falorni | Citigroup | Strong Buy | $182 | +14.2% |
| Andrea Teixeira | JP Morgan | Buy | $176 | +10.4% |
| Peter Grom | UBS | Strong Buy | $170 | +6.6% |
| Robert Moskow | TD Cowen | Hold | $165 | +3.5% |
| Chris Carey | Wells Fargo | Hold | $165 | +3.5% |
| Street Low | Various | Hold/Sell | $140 | -12.2% |
(d) Earnings Surprise History
| Quarter | EPS Act vs Est | EPS Beat/Miss | Rev Act vs Est | Rev Beat/Miss | Guidance |
|---|---|---|---|---|---|
| Q3 FY2024 | $2.31 vs $2.29 | +$0.02 ✅ | $23.3B vs $23.8B | $-0.5B ❌ | Lowered |
| Q4 FY2024 | $1.96 vs $1.94 | +$0.02 ✅ | $27.8B vs $27.9B | $-0.1B ❌ | Maintained |
| Q1 FY2025 | $1.48 vs $1.49 | $-0.01 ❌ | $17.9B vs $18.0B | $-0.1B ❌ | Maintained |
| Q4 FY2025 | $1.96 vs $1.94 | +$0.02 ✅ | $27.8B vs $27.6B | +$0.1B ✅ | FY2026 guided +msd% |
(e) Confidence Band Commentary
The FY2026 EPS consensus of $8.71 (vs FY2025 $6.00) looks like a massive beat trajectory (+45%) but is largely a normalization — FY2025 EPS was depressed by restructuring charges, FX headwinds, and volume weakness. The $8.71 consensus is effectively modeling a return to FY2024 underlying earnings plus 5-6% growth. Analyst range is reasonably tight ($8.38–$9.18), suggesting high confidence in normalization. Revenue growth consensus of +5.9% for FY2026 is achievable given Frito-Lay's pricing power.
⚖️ DDM Verdict: ACCUMULATE — PepsiCo (PEP)
Current price: $159.43 | Analyst Avg PT: $161.79
$118
🔴 Bear
$162
📊 Base
$206
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$149 | Begin position |
| Tier 2 — Add | ≤$140 | Add on weakness |
| Tier 3 — Full | ≤$124 | Full allocation |
| Sell Alert | ≥$175 | Above fair value — consider trimming |
📂 Current Position Summary
| Metric | Value |
|---|---|
| Shares Held | 1,337.71 |
| Average Cost Basis | $156.56 |
| Current Market Value | $213,271 |
| Unrealized P&L | $+3,839 (+1.8%) |
| Annual Dividend Income | $0/yr |
| Yield on Cost | 0.00% |
| vs Target Position (~$200K) | $213,271 vs $200,000 (107% of target) |
Bore Family Office • Analysis generated by Lurch • Not investment advice.