PEPSICO CORPORATION STOCK ANALYSIS Presented by: St. John’s University Undergraduate Student Managed Investment Fund April 29, 2003 Recommendation: Purchase 400 shares of PepsiCo stock at market order Industry: Food and Beverage Kristopher Cartagena –
[email protected] Dion Demetropoulos –
[email protected] Tenisha Martin –
[email protected] Share Data: Fundamentals: Price - $42.65 P/E 2002 – 22x Date – April 25, 2003 P/E 2003 – 19x Target Price - $50.65 52 Week Price Range - $53.23 - $34.00 Earnings Per Share Estimate: Market Capitalization – 74.5 billion EPS 2003E = $2.28 Shares Outstanding – 1.72 billion EPS 2003 Consensus = $2.20 Revenue 2002 – $25.112 billion EPS 2004E = $2.45 EPS 2004 Consensus = $2.44 Stock Chart: MEMORANDUM TO: Student Managed Investment Fund St. John’s University FROM: Kristopher Cartagena Dion Demetropoulos Tenisha Martin DATE: April 29, 2003 SUBJECT: ANALYSIS OF PEPSICO STOCK AS AN UNDERVALUED SECURITY This is the research report that was requested on January 23, 2003 about PepsiCo stock and whether it should be incorporated in to the Student Managed Investment Fund. The analysis was done primarily through secondary research. The analysis revealed that PepsiCo’s stock is currently undervalued at $42.65, as of April 25, 2003. We used a relative valuation model, and determined PepsiCo’s target price to be $50.65. In addition, we used a multi-stage dividend discount model, and determined the stock’s intrinsic value to be $56.83. PepsiCo’s current price of $42.65 is lower than both our target price and its intrinsic value. This confirmed our belief that the stock was undervalued.