2. PepsiCo Structure  CE0- Indra Nooyi  Global Market leader in salty snacks, 2 nd in beverages  50% of revenues from overseas markets

3. PepsiCo Strategy  No longer a “One-trick Pony”  Pressure to split  Bottling acquisitions  New products and healthier options

4. Stock Analysis  % Growth of Stocks (last 5 years)  PEP= 79%  KO- 65%  DPS- 172%  NASDAQ-98%  S & P 500- 99%

5. Stock Analysis Cont.  PEP  Price=$94.60  EPS= 4.42  P/E= 18.78  Market Cap= $126.45 B  KO  Price= $41.03  EPS= 1.982  P/E= 20.84  Market Cap= $178.8 B  DPS  Price= $66.80  EPS= 3.182  P/E= 15.62  Market Cap= $9.749 B

6. Profit Margin  Net income divided by total sales  Shows how much of the every dollar sold in put into earnings  In 2013:  PEP – 10.15%  KO – 18.32%  DPS – 10.41%

7. Profit Margin Five Year Analysis

8. EBITDA Margin  EBITDA divided by total sales  In 2013:  PEP – 18.75%  KO – 29.70%  DPS – 14.99%

9. EBITDA Margin Five Year Analysis

10. Return On Assets Ratio  Net Income divided by total assets  Shows the company’s efficiency in using assets to generate earnings  In 2013:  PEP – 8.70%  KO – 9.53%  DPS – 7.61%

11. ROA Five Year Analysis

12. Return On Equity Ratio  Net Income divided by total equity  Reveals how much profit a company creates with shareholder investments  In 2013:  PEP – 28.89%  KO – 26.03%  DPS – 27.39%

13. ROE Five Year Analysis

14. Total Debt Ratio  Total debt divided by total assets  High debt leverage is a high risk/high reward proposition  In 2013:  PEP – 68.6%  KO – 63.1%  DPS – 72.2%

15. Total Debt Ratio Five Year Analysis

16. Cash Coverage Ratio  EBIT divided by interest  Shows how well the company can cover the interest they owe with their cash on hand  In 2013:  PEP – 13.68%  KO – 30.05%  DPS – 7.30%

17. Cash Coverage Ratio Five Year Analysis

18. Times Interest Earned Ratio  EBITDA divided by total interest  Shows how much the company’s tangible earnings can cover the total interest liability  In 2013:  PEP – 9.75%  KO – 24.78%  DPS – 4.40%

19. Times Interest Earned Five Year Analysis

20. Specific Risks  Consumer trends  Increased cost of raw materials  Expansion into riskier markets  Disruption of the supply chain  Damage to reputation  Cybersecurity  Loss of any key customer

21. Systematic Risks  Risks  Changes in the legal and regulatory environment  New taxes  Unfavorable economic conditions  Fluctuations in exchanges rates  Beta: 0.37  CAPM  Risk free rate of return: 2.3%  Expected market return: 10.3%  Cost of capital : 5.26%

22. PEP Growth Rate  Constant Growth Formula  September 3 2014: 0.655 dividend  September 2010: 0.480 dividend  Growth Rate of 0.08  Coca-Cola (KO) Growth Rate: 0.09  Dr. Pepper/Snapple (DPS) Growth Rate: 0.13

23. “International market expansion strategy through mergers and acquisitions.”  Long Term Investments  Increased nearly 20% over past 3 years  Goodwill account  16,613,000,000 (60% increase from 2009)  Higher than KO and DSP combined in 2013

24. “Focus on emerging markets.”  Coca-Cola’s international success  China, India, and Russia  2006: 26%  2012: 37%

25. “Innovation in marketing initiatives.”  Marketing  $1.7 billion  50% increase