PEP Value Scorecard - PepsiCo

Value Scorecard · run 2026-10-18

13 value checks: 12 scored 1 to 5, plus moat evidence

33/60

low-moderate value score

Earnings & returns

EPS Trend

2/5

Diluted EPS: $6.42 (2022), $6.56 (2023), $6.95 (2024), $6.00 (2025). It ended at or below 2022; the framework scores that as 2.

ROE Trend

5/5

ROE (net income / common equity): 52.0% (2022), 49.0% (2023), 53.1% (2024), 40.4% (2025). Median 50.5%, lowest 40.4%; the framework scores a median above 20% as 5.

ROIC

4/5

ROIC of 15.4%: operating income of $11.50B divided by $74.64B of capital (total assets $107.40B minus current liabilities $32.76B), fiscal year to Dec 27, 2025, as filed in the 10-K (SEC EDGAR). The framework scores 15-20% as 4.

Profit Margins

4/5

Net margin of 11.1%; the framework scores 10-20% as 4; gross margin 54.3%, operating margin 16.9%.

Balance sheet & cash

Debt-to-Equity

2/5

Debt-to-equity of 2.31; the framework scores 1.5-2.5 as 2 (total debt $51.88B, total cash $11.16B).

Free Cash Flow

4/5

Free cash flow (operating cash flow minus capital expenditure): $5.60B (2022), $7.92B (2023), $7.19B (2024), $7.67B (2025). It rose every year but one and ended above 2022; the framework scores that as 4.

Retained Earnings

5/5

Retained earnings, as filed in the 10-Ks (SEC EDGAR): $67.80B (2022), $70.03B (2023), $72.27B (2024), $72.79B (2025). It rose every year; the framework scores that as 5.

Valuation models

Graham IV

1/5

IV = EPS x (8.5 + 2g) x (4.4 / Y) = $7.95 x (8.5 + 2 x 0.0) x (4.4 / 4.5) = $66.07 (EPS CAGR -4.4% floored at 0%; the formula returns a negative value below -4.25% growth). Current price $131.49; price is 99.0% above the model value.

DCF Value

1/5

FCF/share = $6.637, stage 1 growth = 1.3% for 5 years, terminal growth = 3%, discount rate = 10%. Stage 1 PV = $26.09, PV of terminal value = $64.68, DCF value = $90.77. Current price $131.49; price is 44.9% above the model value.

Margin of Safety

1/5

Graham value $66.07 (price is 99.0% above the model value); DCF value $90.77 (price is 44.9% above the model value).

Price-to-Book

1/5

P/B of 8.05; the framework scores above 5.0 as 1.

Business quality

Moat Evidence

Not scored

A moat (a brand, a network, switching costs, patents, scale, a licence) is not a number in the filings, so Valerius doesn’t score it. Below are the figures and the words moat analysis starts from, from the company’s own 10-K filings. The conclusion is yours.

Return on capital, each year

Above 15% in 9 of 10 years (2016-2025); lowest 14.5%, highest 19.0%.

Gross margin, each year

Between 53.0% and 55.1% over 10 years (a range of 2.1 points).

Competition, in the company’s own words · 10-K filed Feb 3, 2026

Our beverage and convenient food products are in highly competitive categories and markets and compete against products of international beverage and convenient food companies that, like us, operate in multiple geographies, as well as regional, local and private label manufacturers and economy brands and other competitors, including smaller companies developing and selling micro brands directly to consumers

The opening of the company’s “Our Competition” section in its 10-K, quoted word for word, not summarized or edited. It is the company’s own description, not Valerius’s view, and may include the company’s expectations. Open the filing.

Return on capital = operating income / (total assets − current liabilities), the ROIC row’s definition; 15% is the framework’s return threshold. Gross margin = gross profit / revenue. Both from each year’s 10-K via SEC EDGAR. Moat analysis commonly looks at whether returns and margins held up over many years. These figures don’t say whether the company has an advantage, what it is, or whether it will last.

Capital Allocation

3/5

Capital allocation, 2022-2025: dividends or buybacks paid in every year (pass); $32.22B paid out against $28.39B of free cash flow (fail: paid out more than free cash flow); total debt $39.55B to $49.90B, up 26.2%, 3.2x EBITDA (fail: up more than 10% and above 2x EBITDA); shares outstanding 1.38B to 1.37B, down 0.7% (pass). 2 of 4 tests passed; the framework scores that as 3.

Filings

Company notices to the SEC

Not scored

Three kinds of event the company reported to the SEC in the last 5 years, from its filings on SEC EDGAR.

These are events the company reported to the SEC. An auditor change or a late filing can have many causes; each date links to the filing, where the company explains it. Valerius does not score these.

How the Graham and DCF values were calculated

  Graham Formula:
    IV = EPS x (8.5 + 2g) x (4.4 / Y)
    EPS = $7.95, g = 0.0%, Y = 4.5
    g floored at 0.0% (3-year EPS CAGR was -4.4%; below -4.25% the formula returns a negative value)
    IV = $66.07
    Current price $131.49 vs Graham value $66.07 — price is 99.0% above the model value.

  DCF:
    FCF/share = $6.637
    Stage 1 growth = 1.3% for 5 years | terminal growth = 3.0% | discount rate = 10.0%
      Y1: $6.723 → PV $6.112
      Y2: $6.810 → PV $5.629
      Y3: $6.899 → PV $5.183
      Y4: $6.989 → PV $4.773
      Y5: $7.080 → PV $4.396
    Stage 1 PV sum = $26.09
    Terminal value at end of Y5 = $104.17
    PV of terminal value = $64.68
    DCF value = $90.77
    Current price $131.49 vs DCF value $90.77 — price is 44.9% above the model value.

Data from yfinance summary figures and financial statements, and from the company’s 10-K filings via SEC EDGAR; computed at a price of $131.49. Every score is calculated from the figures by the framework’s fixed rules, and the explanation beside it is generated from the same figures: Graham value, DCF value, margin of safety, ROIC, profit margins, debt-to-equity, price-to-book, EPS trend, ROE trend, free cash flow, retained earnings and capital allocation. No AI is involved in this scorecard. The moat is shown as evidence, without a score. Read each score with the figures beside it. Intrinsic value calculations are model outputs based on stated assumptions, not predictions.

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