Are PepsiCo’s shares properly valued?

PepsiCo shares (NASDAQ: PEP) has risen nearly 12% in the past year and is currently trading at $ 149 per share, which is above levels seen just before the coronavirus pandemic. The stock rally was driven by macroeconomic factors as well as company-specific factors. Stimulus measures and the successful deployment of vaccines have led to expectations of a faster economic recovery and increased consumer spending. This will benefit a food and beverage giant like PepsiCo to improve its sales and margins. The company performed well in the first quarter of 2021 with impressive margins in the snack category, which is typically eaten at home. For example, Frito-Lay’s margins stood at 29% in the first quarter. In addition, the recent rally is also a reflection of the continuous innovation within the company. PepsiCo having benefited from the trend of home consumption, it recently introduced the Neon Zebra – which is part of the category of alcohol-free cocktail mixers – in four different flavors, to capitalize on the resumption of the trend of brewing. cocktails at home. . It has also launched a new range of juices (Frutly) for its young clientele. New launches to take advantage of the latest consumer trends and when the economy is poised to recover, have led to expectations of healthy revenue and earnings growth in the coming quarters.

But will PepsiCo’s stock continue on its bullish path over the next few months, or is a stock correction more likely? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data over the past ten years, PEP stock returns average close to 4.6% then one year (252 trading days) period after experiencing a 12% increase over the one-year period (252 trading days). But how would those numbers change if you wanted to hold PEP shares for a longer or shorter period? You can test the answer and many other combinations on the Trefis Machine learning to test the chances of a rise in PEP shares after a fall and vice versa. You can test the chances of recovery over different time intervals of a quarter, a month, or even a single day!

MACHINE LEARNING MOTOR – try it yourself:

IF The PEP share has evolved by -5% over five trading days, THEN Over the next 21 trading days, the PEP share moves an average of 4%, with a 68% chance that the share will give a positive return in the following month.

Some fun scenarios, FAQs and explanation of PEP stock movements:

Question 1: Is the average return on PepsiCo shares higher after a decline?


Consider two situations,

Case 1: PepsiCo stock drops -5% or more in a week

Case 2: PepsiCo share increases by 5% or more in a week

Is the average return on PepsiCo shares higher in the next month after Case 1 or Case 2?

PPE stock fares better after case 1, with an average yield of 4.1% during the following month (21 trading days) in case 1 (where the stock has just suffered a loss of 5% during the previous week), against an average return of 0.5% for case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days in case 1, and an average return of only 0.5% for case 2, as detailed in our dashboard. which details the average return of the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how the PepsiCo stock is likely to behave after a specific gain or loss over a period of time.

Question 2: Does patience pay?


If you buy and hold PepsiCo shares, you would expect that over time short-term fluctuations will cancel each other out and the positive long-term trend will work for you – at least if the company is otherwise strong. .

Overall, according to data and calculations from the machine learning engine Trefis, patience absolutely pays for most actions!

For PEP actions, returns over the following N days after a variation of -5% over the last 5 trading days is detailed in the table below, along with the returns of the S & P500:

Question 3: What about the average return after a rise if you wait a while?


The average return after a rise is naturally lower than that after a fall, as detailed in the previous question. Interestingly, however, if a stock has won in the last few days, you’d better avoid short-term bets for most stocks.

PEP returns over the next N days after a 5% variation over the last 5 trading days is detailed in the table below, along with the returns of the S & P500:

It is powerful enough to test the trend of PepsiCo stocks yourself by changing the entries in the charts above.

E-commerce is eating away at retail sales, but it could be an investment opportunity. See our theme on Ecommerce stocks for a diverse list of companies that should benefit from the big change.

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