Modern-day PepsiCo, Inc. (commonly referred to as Pepsi due to its popular cola drink) was founded in 1965 when Pepsi-Cola Company and Frito-Lay, Inc. merged in what was dubbed ‘a marriage made in heaven’. The merger, at the time, envisioned a world where consumers would enjoy perfectly salted snacks paired with the best cola on the planet. It is fair to say Pepsi is living its vision, with consumers in over 200 countries and territories enjoying its products over one billion times every day. Headquartered in Purchase, New York, US, Pepsi is now one of the leading food and beverages companies in the world, as of September 2021, with the company boasting a broad range of popular and successful products, including 23 brands that generate at least $1 billion in annual revenues.
At the time of the 1965 merger, Pepsi’s products portfolio included Pepsi-Cola, Mountain Dew, Diet Pepsi, Fritos corn chips, Lay’s potato chips, Cheetos snacks, Rold Gold pretzels, and Ruffles potato chips. The company has often pursued organic growth by being one of the most notable brand advertisers and inorganic growth by being a willing player in the mergers and acquisitions market. Pepsi famously boosted its product portfolio by acquiring Tropicana in 1998, and it also completed a successful merger with Quaker Oats in 2001.
Now a mega diversified consumer staples company, Pepsi continues to pursue its stated mission of becoming the undisputed global leader in the convenience foods and beverages market. In recent years, the company has implemented innovations that will make its products healthier. This focus has also impacted its M & M&A plays, with the 2018 acquisition of SodaStream as an example of its strategy to broaden its offering of healthier products in the consumer market.
PepsiCo, Inc. is listed on the NASDAQ, where it trades under the ticker symbol PEP. The stock is categorised in the Consumer Defensive sector, under the Beverages-Non-Alcoholic industry.
Pepsi Stock History
Pepsi has implemented four stock splits in its history, with the last one performed on May 29th, 1996. PEP stock has been an impressive performer since the latter half of the 1990s. The stock traded at a split-adjusted price of circa $20 in early 1995 but gradually edged higher and crossed the $50-mark by the end of 2000.
After a brief period of consolidation, the PEP stock started drifting upwards and managed to peak at circa $80 by December 2007. The effects of the 2008 Great Recession then triggered a correction that saw the stock drift to lows of below $50 by March 2009. Since then, the stock has maintained an upward trajectory that saw it hit the $150-mark in February 2020, but the effects of the COVID-19-inspired economic downturn triggered a sharp correction to just above $100. The stock, however, had a sharp recovery that drove the stock to its all-time high of just below $160 in August 2021.
Pepsi’s stability and positive cash flow business has allowed the company to be a generous and consistent dividend payer. The company has increased its dividend payouts from $0.35 in 2002 to over $4.00 in 2021, averaging a dividend yield of above 2.65%.
How to Trade PepsiCo Stock
Here are some of the factors to consider when trading PEP stock:
- Macroeconomic Factors
As a consumer staples company, Pepsi’s performance is dependent on prevailing macroeconomic conditions. Consumers will typically tighten their financial belts during economic downturns, while they will loosen their purse strings during periods of economic boom. This means that the PEP stock will tend to rise during positive economic conditions, and they are likely to edge lower during tough economic times.
Pepsi faces stiff competition from the different business areas it operates in. In the non-alcoholic beverage space, Pepsi has to deal with long-term rival Coca-Cola as well as other significant players such as Monster Beverage Corporation, Cott Corporation, Red Bull GmbH, and Dr Pepper Snapple Group, Inc. Competitors include Kraft Foods Inc., Kellogg Company, Mondelez International Inc., and ConAgra Foods Inc in the food and snacks space. Competition also comes from regional and local private-label manufacturers. In its industry, Pepsi competes on price, quality, variety, and distribution.
- Periodic Earnings Reports
Pepsi’s fiscal year runs from January to December. The company releases periodic earnings reports (quarterly, semi-annually, and annually) to update shareholders and investors on their business health and performance. Strong numbers, such as beating earnings and positive future guidance, can inspire higher stock prices. In contrast, weak figures, such as earnings misses and negative future guidance, could trigger lower stock prices.
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