DCF Studio

    PEP · NMS · Consumer Defensive

    PepsiCo, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 144.41

    Market price

    USD 140.42

    Implied upside

    +2.8%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedCapital expenditure runs at 5.6% of revenue against depreciation of 4.1%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 144.41+2.8%
    Exit multiple
    USD 142.95+1.8%
    Market price
    USD 140.42

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn6bn12bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 99.3bnUSD 101.8bnUSD 104.3bnUSD 106.9bnUSD 109.6bnUSD 112.3bnUSD 115.1bnUSD 118.0bnUSD 120.9bnUSD 124.0bn+2.5%
    EBITUSD 13.8bnUSD 14.2bnUSD 14.5bnUSD 14.9bnUSD 15.3bnUSD 15.6bnUSD 16.0bnUSD 16.4bnUSD 16.8bnUSD 17.3bn+2.5%
    NOPATUSD 11.2bnUSD 11.4bnUSD 11.7bnUSD 12.0bnUSD 12.3bnUSD 12.6bnUSD 12.9bnUSD 13.3bnUSD 13.6bnUSD 13.9bn+2.5%
    Add depreciation & amortisationUSD 4.0bnUSD 4.1bnUSD 4.2bnUSD 4.3bnUSD 4.4bnUSD 4.6bnUSD 4.7bnUSD 4.8bnUSD 4.9bnUSD 5.0bn+2.5%
    Less capital expenditureUSD -5.6bnUSD -5.8bnUSD -5.9bnUSD -6.1bnUSD -6.2bnUSD -6.4bnUSD -6.6bnUSD -6.8bnUSD -7.0bnUSD -7.1bn+2.8%
    Capex, % of revenue5.6%5.7%5.7%5.7%5.7%5.7%5.7%5.7%5.8%5.8%-
    Less increase in working capitalUSD -165.3mUSD -76.0mUSD -77.9mUSD -79.9mUSD -82.0mUSD -84.0mUSD -86.2mUSD -88.4mUSD -90.6mUSD -92.9m-6.2%
    Free cashflow to firmUSD 9.4bnUSD 9.8bnUSD 10.0bnUSD 10.2bnUSD 10.5bnUSD 10.7bnUSD 10.9bnUSD 11.2bnUSD 11.5bnUSD 11.7bn+2.5%
    Discount factor0.96860.90860.85240.79970.75020.70380.66030.61940.58110.5451-
    Present valueUSD 9.1bnUSD 8.9bnUSD 8.5bnUSD 8.2bnUSD 7.8bnUSD 7.5bnUSD 7.2bnUSD 6.9bnUSD 6.7bnUSD 6.4bn-
    Present Value Of The ForecastUSD 77.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.545Reported 0.321, pulled toward 1.0 (Blume)
    Cost of equity7.20%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 12.0x interest cover. Book interest / average debt was lower, at 2.4%.
    Market capitalisationUSD 191.4bn79.3% of capital
    Total debtUSD 49.9bn20.7% of capital, book value as a proxy
    Tax rate19.2%Effective, capped at statutory
    WACC6.59%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 144.41

    68% of EV

    Forecast FCFF, final year
    USD 11.7bn
    Capex at depreciation, working capital in reinvestment
    USD 13.9bn
    Less reinvestment at g/ROIC (15.2% of NOPAT)
    USD -2.1bn
    Capitalised
    USD 11.8bn
    ROIC (reported)
    16.5%
    Terminal value, undiscounted
    USD 296.0bn
    Terminal value, discounted
    USD 161.4bn
    Enterprise value
    USD 238.7bn
    Less net debt
    USD 40.4bn
    Equity value
    USD 198.3bn

    Exit at 13.1x EBITDA

    Value per shareUSD 142.95

    67% of EV

    Terminal value, undiscounted
    USD 292.4bn
    Terminal value, discounted
    USD 159.4bn
    Enterprise value
    USD 236.6bn
    Less net debt
    USD 40.4bn
    Equity value
    USD 196.3bn

    Spread between methods: 1%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.59%231.83262.09307.21381.16523.42
    5.59%167.82181.35199.51224.99263.02
    6.59%128.98135.77144.41155.67170.81
    7.60%102.93106.51110.94116.50123.58
    8.60%84.2586.1488.4591.3094.85

    Outlined: this model. Green text: above today's price of 140.42. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year2.8%2.8%2.5%
    EBIT margin14.4%13.9%13.6%
    Discount rate-6.6%6.7%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.