Pepsiico (Nasdaq: PEP) became a household name. In fact, it is likely that you currently have at least one of the company’s products in your home.
However, investors must consider more than buying shares than the company’s product everywhere. You should analyze the prospects of the company before you start your investment.
This is especially necessary when the shares decreased dramatically. In the case of Pepsico, shares in recent years until June 3 Decreased by about 23%.
Time to take a closer look at Pepsico to find out whether the market has reacted too much to short -term concerns or a fall in advance for long -term problems.
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Pepsico sells its drinks and food goods with brands such as Pepsi, Gatorade and Quaker. However, even this large consumer Staples is not protected from greater economic forces.
In the first quarter, revenue increased only about 1%compared to a year ago. The increase in the price was 3 percentage points, but less volume was deprived of 2 percentage points. The company has adjusted these data to eliminate foreign currency translation effects and acquisition and sale impact. On the basis of an adjusted basis, the profitability of the activity decreased by 1%.
Of course, these figures are not very encouraging and the volume has been weak for some time. Investors would like to increase income growth. However, it is important to remember that consumers are tired of constantly high inflation, which compressed their wallets and the rates add another level of uncertainty.
The management pointed out the economic challenges in the prediction of a low -divorce percentage of revenue this year and one share revenue compared to 2024.
However, these short -term global economic factors do not change my optimistic approach to Pepsiico’s long -term prospects, taking into account its powerful brands. At some point, prices will stabilize and people will return to more common buying habits. When they do it, it’s hard to imagine that they won’t get a bottle of soda or chips sold after a pepsico umbrella.
If you like dividends, Pepsiico is suitable for an account. In fact, the company has produced quite a lot of results.
The Board of Directors increased the company’s quarter -dividend by 5%, from June. The new quarter course is $ 1,4225 or $ 5.69 a year. It is also a strong sign of the future of the management and the Board of the Board.
Impressively, this was 53 consecutive years with the increase in dividends. This is done by the King of Pepsico dividends, who is a group of companies that has at least 50 years of benefits.
At the new annual dividend rate, the shares have 4.3% of the dividend yield. It is much larger than S&P 500 Index 1.3%.
In addition to the impressive results and the recent increase in increase, Pepsico can afford dividends when looking at objective measures such as 78% of the payment ratio.
The spicy Pepsico reserve downturn led to a better assessment. Its prices and force (P/E) ratio decreased from 27 to 19.
Of course, the gentle growth of sales and earnings will reduce stock price and P/E ratio. While Pepsico may never get fast growth, the company should notice a greater increase in revenue and income, when a broader economic policy returns to a normal state and consumers feel more convenient to spend money.
What should investors do? While investors looking for pure growth stocks can find better alternatives if you are interested in dividends, Pepsiico is a good choice. It is based on the attractive inventory income and commitment to regularly. In addition, patient investors should benefit from a higher share price.
The prospect of attractive overall return increases the potential for those who want to wait for better economic times.
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Lawrence Rothman, CFA, has no position in any of the above shares. The Motley fool has no position in any of the above stocks. The Motley fool has a disclosure policy.
Is Pepsico still a refreshing purchase? initially released by The Motley Fool
