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Discussion Thread: Financial Analysis
PepsiCo was founded in 1965 by Don Kendall and Herman Lay when they combined
their companies, Pepsi-Cola and Frito-Lay (Pepsico, 2022). Today, the company is considered to
be a global leader in snack foods and beverages. PepsiCo is currently making progress toward a
more environmentally friendly operational design (Eswaran, 2023). One way they are doing this,
as stated in the Q3 2023 investor letter, is through the elimination of plastic rings on multipacks
of beverages. By 2030, the company hopes to reduce its use of virgin plastic by fifty percent.
As of today, the stock price of PepsiCo is $164.41 (Pepsico, Inc. (PEP) Stock Price,
Quote, History & News - Yahoo Finance, n.d.). In the past year, the stock price has ranged from
$196.88 at its highest to $155.83 at its lowest. Year after year, the company has shown steady
growth through increases in profits and sales. Although most related companies’ stock prices are
lower than PepsiCo's, Coca-Cola is a major competitor. Coca-Cola’s stock price as of today is
$639.96.
Environmental, Social, and Governance (ESG) scores assist managers in the design and
implementation of investment strategies (Ehlers et al., 2023). PepsiCo has an ESG Risk Score of
15.9 (PepsiCo, Inc. (PEP) Environment, Social and Governance (ESG) Ratings - Yahoo Finance,
n.d.), which, in comparison with other companies, is relatively low. However, they do rank higher
than some companies regarding controversy surrounding ESG (Inline XBRL Viewer, n.d.). One
potential reason for high controversy levels is the amount of plastic used to produce and store
PepsiCo’s products. However, the efforts of the company to reduce such waste, as stated above,
should encourage potential investors’ hope for the future success of the company.
Although sustainability initiatives are a highly debated topic, there are many other factors
that play into the success and growth of a company. Based on previous trends in PepsiCo’s
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financial data, analysts estimate that the company will grow approximately 8.19% over the next
five years (Pepsico, Inc. (PEP) Analyst Ratings, Estimates & Forecasts - Yahoo Finance, n.d.). This
is another encouraging prospect for potential investors.
Proverbs 13:16 states, “All who are prudent act with knowledge, but fools expose their
folly” (New International Bible, 1978/2011). It is important for individuals to consider fully the
benefits and drawbacks of investing in a company before doing so. Investments have the
potential to be incredibly beneficial but could also prove detrimental when done carelessly.
When considering PepsiCo’s financial trends as well as its initiatives for sustainability, one can
determine that investing in this company is a highly strategic decision.
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References
Ehlers, T., Elsenhuber, U., Jegarasasingam, K., & Jondeau, E. (2023). Deconstructing ESG
Scores: How to Invest with your own Criteria?, IMF Working Papers, 2023(057), A001.
Retrieved Oct 27, 2023, from https://doi.org/10.5089/9798400235283.001.A001
Eswaran, S. (2023). Here are the sustainability initiatives of PepsiCo (PEP). Yahoo Finance.
DOI: https://finance.yahoo.com/news/sustainability-initiatives-pepsico-pep-
113819801.html
Inline XBRL Viewer. (n.d.). Www.sec.gov. https://www.sec.gov/ix?
doc=/Archives/edgar/data/77476/000007747623000007/pep-20221231.htm
New International Bible. (2011). Zondervan. (Original work published 1978)
Pepsico. (2022). PepsiCo Home. PepsiCo, Inc. Official Website. https://www.pepsico.com/
Pepsico, Inc. (PEP) Analyst Ratings, Estimates & Forecasts - Yahoo Finance. (n.d.).
Finance.yahoo.com. https://finance.yahoo.com/quote/PEP/analysis?p=PEP
PepsiCo, Inc. (PEP) Environment, Social and Governance (ESG) Ratings - Yahoo Finance.
(n.d.). Finance.yahoo.com. Retrieved October 27, 2023, from
https://finance.yahoo.com/quote/PEP/sustainability?p=PEP
Pepsico, Inc. (PEP) Stock Price, Quote, History & News - Yahoo Finance. (n.d.).
Finance.yahoo.com. https://finance.yahoo.com/quote/PEP?p=PEP&.tsrc=fin-srch
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