Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of A-. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 1.5%. Since the same quarter one year prior, revenues slightly increased by 1.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has significantly increased by 201.73% to $702.00 million when compared to the same quarter last year. In addition, PEPSICO INC has also vastly surpassed the industry average cash flow growth rate of 55.74%.
- The gross profit margin for PEPSICO INC is rather high; currently it is at 57.80%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, PEP's net profit margin of 8.54% significantly trails the industry average.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
PepsiCo, Inc. operates as a food and beverage company worldwide. PepsiCo has a market cap of $127.7 billion and is part of the consumer goods sector and food & beverage industry. The company has a P/E ratio of 21.00, above the S&P 500 P/E ratio of 18.00. Shares are up 20.7% year to date as of the close of trading on Friday.
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--Written by a member of TheStreet Ratings Staff.
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