Unlocking PepsiCo, Inc. (PEP)’s Potential

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The Coca-Cola Company (NYSE:KO) is the most expensive among the three companies. It is trading at $40.80 per share, with the total market cap of $181.76 billion. The market values Coca-Cola at as much as 15.17 times its trailing EBITDA. However, I personally think that Coca-Cola deserves a high valuation with its highest operating margin.

By 2020, The Coca-Cola Company (NYSE:KO) is expected to double its system revenue while improving system margins. Moreover, the company targeted that it could more than double its servings to more than 3 billion a day, resulting in around 3%-4% annual volume growth.

My Foolish take

Indeed, PepsiCo, Inc. (NYSE:PEP) is cheap at its current price, and much more shareholders’ value would be unlocked by the separation of the snack and the beverage business. With Nelson Peltz’s activism, investors could consider PepsiCo an opportunistic play on the business spinoff or mergers. Having the global leading positions in consumer food & beverage business, all three companies, PepsiCo, Mondelez and The Coca-Cola Company (NYSE:KO) are worth holding in a long run.

Anh HOANG has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and PepsiCo. The Motley Fool owns shares of PepsiCo.!

The article Unlocking PepsiCo’s Potential originally appeared on Fool.com.

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