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Pepsico, Inc. Message Board

  • Pizzapost Pizzapost Apr 19, 2000 4:52 PM Flag

    Analyst David Kathman says,

    "Unless they post earnings significantly above or
    below expectations the stock won't move".
    increase in earnings and the jerk still wants more!!
    the market is following jerks with this mentality
    then we are doomed to $35 for eternity. Maybe we need
    a major crash to clear out all these bone heads who
    buy into companies that don't make any profit. Then a
    REAL corporation like PEP will be seen for what it
    truly is, a company that actually has profits! (I'm

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    • Allow me to introduce myself. My name is Steve,
      I'm from way over on the other side of the 'pond', in
      England. I am a regular trader and long term investor on
      the New York market. Some of you may recognise me as
      a regular contributor on the YUM message board, as
      a long term backer of this stock due to its
      potential outstanding value.

      I would just like to
      make a couple of points re PEP. For info I am long PEP
      right now but only to the tune of a few hundred bucks-
      i'm planning to gradually beef up that stake from
      trading over the coming year, probably to about 150
      shares. I consider PEP a core long term portfolio holding
      for most investors.

      re the earnings, they were
      very good indeed. The company is very different to
      what it was only 3 years ago with the disposals of
      YUM,PBG and acquisition of Tropicana etc. Performance to
      date in the new division has been very encouraging
      indeed, as I guess you all know and Frito Lay continues
      to produce nice, solid results.

      I believe the
      real reason for the failure of the stock to leap
      ahead, is simply down to the fact that PEP isn't the
      type of company to justify a stock price rising 30-40%
      a year for any sustainable period. It's getting
      double digit earnings growth, and long term you would
      expect it's stock to match it's earnings. It's already
      trading on a PEG ratio of about 2 on this years expected
      earnings i.e. earnings are growing at around 13% per annum
      according to current estimates for the next five years-
      this would seem a reasonable assumption. The PE's a
      little over 25x forward earnings. It's a very good long
      term investment, but unless something radical changes
      and long term earnings growth steps up considerably
      (unlikely given the solid,relatively mature businesses that
      PEP owns) then there just isn't much real room for a
      major sustainable stock price advance, at least not if
      you're going on 'traditional' valuation measures, in my

      I think that's what Kathman was getting at when he
      said unless there's a significant surprise the stock
      won't move much. The general news of 13% eps growth or
      around that level, looks to be all in the price. BUT
      look on the bright side, when people feared the sky
      was going to fall in on large sections of the market
      last week (possibly for good reason IMHO but that's a
      different matter entirely), PEP stock was rock solid,
      finishing unchanged on the day on Friday if I remember
      What you have in PEP is a great solid company which
      serves very well as a solid low risk long term
      investment and will add some stability to your

      In conclusion, my view on PEP is- good investment,
      one to buy and hold- just don't enter it with
      unrealistic expectations of making sudden big gains, because
      it isn't often going to happen with this type of
      company. Obviously this is just my humble opinion and i'm
      no acclaimed expert by any means- but I think if you
      follow these lines of thought when you get in to the
      stock you won't go far wrong. In these days of tech
      stock prices doubling in weeks and IPOs quadrupling in
      a day, it's very easy to get caught in a trap of
      looking for this kind of performance from everything
      regardless of the underlying fundamentals.

      forward to hearing any comments/views you may all have

      have a nice day.


      • 2 Replies to SteveC282898
      • You won't find any disagreement to your post from
        the longs on this board. I think most of the faithful
        see it as you do. However, we would love to see PEP
        hover in the 40's since we have been the 30's for
        several years now. I love PEP and I'm holding but, ten
        points in three years isn't asking for the moon.
        the way, how's the weather over there?

      • That was the most knowledgeable post I've read on
        this board in a LONG time. I agree with what you say,
        BTW. Pepsi is in a fairly mature sector of business,
        and Frito-Lay would be getting there as well if not
        for international growth. But, the market sentiment
        is the main problem PEP has right now. It's obvious
        from this week's action that the money that left the
        tech world did NOT return to the value "old economy"
        stocks in droves. People still believe that their best
        bets for long-term growth are in the movers and
        shakers of the tech world, and I tend to agree with them,
        especially over a 20-40 year time frame. I'm NOT talking
        consumer internet issues here, either. PEP is a decent
        holding in a core portfolio, but only as a small % of
        one's overall holdings. As a Frito employee, I see so
        many employees that have their whole life savings in
        PEP stock and options, and I feel bad for

        As for this message board, it's fairly obvious
        from today's lack of activity that there are not a
        whole lot of serious, knowledgeable posters frequenting
        the board, and that is a bad omen, in my opinion.
        Most days, you can read 10 or 15 posts before PEP is
        even mentioned, and that doesn't indicate much real
        interest in the company, to me. Today was a classic case
        of "sell the news". I had hoped to see $40 in this
        issue at any time now, but, after today, I have serious
        doubts we will see that for some time...

        keep posting. We could use some more people who are
        interested in discussing PEP in a serious manner here...

    • Couldn't have said it better, my friend. How many freekin' quarters of positive earnings is it gonna take to move this beast?

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