Stock price when the opinion was issued
Historic growth story of Pepsi was the Frito-Lay franchise. Not the growth company it was. Still trades at a reasonably high multiple for its growth rate. International sources of revenue, so the strong USD is a major headwind.
Companies in the snack space have traded off on the fears of GLP-1. Volumes are starting to drop. Growth metrics just don't support the valuations.
Operates in a cola duopoly with KO, good job creating shareholder value. He likes market leaders like these that have little to no direct competition, so this name fits that bill. That being said, it's a lot harder these days with consumer brands to establish a brand and build a moat. Today he could launch a cola company online, using Instagram and FB, with very little cost and effort, and with luck it could even go viral. Brands will have a tough time.
Very strong, well-established brand. PEP got into snacks, which are up against healthier lifestyles. He owns FEVR, take a look at that one.
Before they reported early yesterday, several analysts were downgrading it, based on lowering organic growth forecasts, concerns over Frito-Lay, weakness in North America, and others. Results: 1.3% revenue growth vs. 2.7% expected, and -2% food and beverage sales volume. No surprise, so shares actually closed higher by the end of the day. Highlights of Q3: Gatorade gained market share, and core operating expanded 90 basis points despite more spending on ads. Pepsi reiterated full-year earnings growth of 8%. They will add more automation to cut costs and add healthier snacks. The street expected a bad quarter, so it sold off, but the quarter wasn't that bad.