QS Research · Michael Burry's Scion Capital analyst template · 2006
PEPSICO INC (PEP)
As of 2026-11-08 · 13/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case +0% · downside -12% · upside +10%
At $141.34 PepsiCo carries a $192.61B market cap and $237.02B EV, or 12.7x TTM EBITDA of $18.72B and 17.7x TTM net income to common of $10.90B - the very multiple my base case uses - so the price already embeds roughly flat EBITDA of about $18.7B and no growth. What the market may be missing is that a 12.7x EV/EBITDA and 17.7x P/E already price a broken North America, while international grew organic revenue 7-9% in Q3 2026, organic revenue accelerated to +3.1% from +2.4% in Q2 2026, and a director put $23.7M of his own money in at $128.28 on 2026-10-14. What the bulls may be missing is that core, not GAAP, is the business: Q3 2026 core operating margin fell 35 bps to 16.9% even with a 4-percentage-point tariff-refund benefit, FY2026 core EPS growth guidance was cut to 2.5-3.5% from 5-7%, and the 'structural cost actions' meant to fix it carry no dollar amount, date or headcount. Held at its own 12.7x, EBITDA of $18.72B less $44.41B net debt over 1,362.74M shares is $141.87, or +0.4% versus today; an 8% EBITDA gain gives $155.83 (+10.3%) and a 10% decline gives $124.42 (-12.0%), so neither the long rule (base +30%) nor the short rule (base -30%) is met - this is a watch, not a position.
Key numbers
- Share price: $141.34
- Market cap: $192.61B
- Latest financial period: TTM to Sep 5, 2026
- Revenue (TTM): $98.24B
- EV / EBITDA (TTM): 12.7x
- P/E (TTM): 17.7x
- Price / book: 8.64x
The 15 boxes
- ✓ 1. Long-form business notes
PepsiCo is a six-segment global beverage and convenient-foods company with FY2025 revenue of $93.92B and operating income of $11.50B; it reaches customers mainly through DSD, warehouse and distributor networks plus e-commerce. Revenue, operating income and operating cash flow all rose from FY2020 to FY2025, though FY2025 operating income was below FY2024. The latest 10-K documents portfolio moves (Sabra buy-in and the 2024 shift of the alcoholic-beverage business to licensing) and customer concentration (Walmart about 14% of 2025 revenue); the provided FY2020 excerpt is only a pointer and does not itself describe the old segment structure.
- ✓ 2. Competitive advantage
PepsiCo has a durable but not unassailable advantage: scale brands in convenient foods and a DSD distribution system, with FY2025 gross margin holding near 54%. The moat is narrower in beverages, where Coca-Cola had about 20% versus PepsiCo's about 16% of the 2025 U.S. liquid refreshment beverage category and a carbonated soft drink share advantage outside the U.S.; competition includes private label and micro brands, and Walmart was about 14% of 2025 consolidated net revenue. FY2025 operating margin fell to 12.2% from 14.0% and net income to common fell to $8.24B from $9.58B, so the advantage did not prevent profit pressure.
- ✓ 3. 10-Q takeaways
Q3 2026 reported net revenue rose 5.6% to $25,274M and organic revenue rose 3.1%; operating margin was 16.9% versus 14.9%, but core operating margin fell 35 bps to 16.9% and core operating profit rose only 3%. International segments carried growth while North America foods was flat and North America beverages was flat organically with volume down 2%. FY2026 guidance is numeric: approximately +3% organic revenue, approximately +6% net revenue, core EPS +2.5% to +3.5%, and $8.9B cash returns including $1.0B of buybacks. Quality caveats: reported operating profit and year-to-date EPS growth include prior-year impairment comparisons, tariff refunds and acquisition/divestiture items; core growth is much lower.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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