Pepsi Financial Analysis

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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 – kcart26@yahoo.com Dion Demetropoulos – Ddeme829@aol.com Tenisha Martin – tenishax@hotmail.com Share Data: Price - $42.65 Date – April 25, 2003 Target Price - $50.65 52 Week Price Range - $53.23 - $34.00 Market Capitalization – 74.5 billion Shares Outstanding – 1.72 billion Revenue 2002 – $25.112 billion Stock Chart: Fundamentals: P/E 2002 – 22x P/E 2003 – 19x Earnings Per Share Estimate: EPS 2003E = $2.28 EPS 2003 Consensus = $2.20 EPS 2004E = $2.45 EPS 2004 Consensus = $2.44 MEMORANDUM TO: FROM: Student Managed Investment Fund St. John’s University Kristopher Cartagena Dion Demetropoulos Tenisha Martin April 29, 2003 ANALYSIS OF PEPSICO STOCK AS AN UNDERVALUED SECURITY DATE: SUBJECT: 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. We also analyzed the company’s management strategies, financial data, products, performance in its markets, as well as other business indicators of the health of a company. After conducting a complete analysis of the stock, we recommended: 1. Purchase

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