Company DCF analysis file
PepsiCo DCF Analysis
PepsiCo’s DCF should connect food and beverage pricing, volume and distribution costs to cash after reinvestment. Reported revenue growth, product operating profit and proceeds from selling property are different measures. The annual tables below preserve those boundaries before any recurring cash or terminal-margin assumption is made.
Read product and distribution costs before adjusting profit
Fiscal years ended December 28, 2024 and December 27, 2025; consolidated company. Interim weeks are kept separate. Amounts use the monetary scale stated in each table caption. Source: annual financial statements. Reported lines retain the issuer’s scope; derived ratios use the displayed denominators.
| Measure | FY2024 | FY2025 |
|---|---|---|
| Net revenue | 91,854 | 93,925 |
| Cost of sales | 41,744 | 43,066 |
| Gross profit | 50,110 | 50,859 |
| SG&A | 37,190 | 37,368 |
| Intangible impairment | 33 | 1,993 |
| Operating profit | 12,887 | 11,498 |
| Net income attributable to PepsiCo | 9,578 | 8,240 |
| Gross margin: derived | 54.6% | 54.1% |
| Operating margin: derived | 14.0% | 12.2% |
The gross margin precedes selling and distribution support included in SG&A. A price/mix improvement should not be treated as an equal cash gain if it comes with weaker volume, higher promotion or more channel inventory. Forecast those drivers together before selecting a group margin.
An impairment reduces accounting profit without being an identical current payment, but a lower carrying value does not make the underlying business free to maintain. Define any normalization with the reinvestment and cost assumptions required to sustain the product and distribution system.
Keep the six divisional sales populations visible
The annual segment table uses the following FY2025 organization. Sales are not separate divisional free cash flow.
| Division | Revenue |
|---|---|
| PepsiCo Foods North America | 27,528 |
| PepsiCo Beverages North America | 28,197 |
| International Beverages Franchise | 4,997 |
| EMEA | 18,025 |
| Latin America Foods | 10,549 |
| Asia Pacific Foods | 4,629 |
| Consolidated | 93,925 |
The mix includes foods, company-operated beverage systems and franchise relationships with different cost and capital needs. Do not apply one assumed commodity exposure or reinvestment ratio to every division without a rationale. Keep reported sales, organic growth and currency translation as distinct views of performance.
Trace earnings into cash and reinvestment
Reconciliation source: annual earnings and cash-flow statements. Subtotals below are checkpoints, not extra amounts to add. Grouped adjustments are calculated from the disclosed cash-flow lines.
| Step | FY2025 |
|---|---|
| Operating profit | 11,498 |
| Pension / net interest / tax | -3,203 |
| Consolidated net income: subtotal | 8,295 |
| Depreciation / amortization | 3,451 |
| Impairment / other charges | 1,946 |
| Net restructuring / acquisition adjustments | 412 |
| Other reconciliation groups | 340 |
| Operating assets / liabilities | -2,357 |
| Operating cash: subtotal | 12,087 |
| Gross capital spending | -4,415 |
| After gross capital spending: derived | 7,672 |
| Property-sale proceeds | 528 |
| Issuer non-GAAP free cash flow | 8,200 |
Other reconciliation groups lease-asset amortization, pension expense and contributions, share compensation, tax adjustments/payments and recall cash. The net restructuring/acquisition group keeps actual payments alongside the related charges. The consolidated net-income starting point includes noncontrolling interests, unlike the parent-attributable profit in the annual table.
Property-sale proceeds explain the difference between the gross-capex residual and the issuer cash measure. They are disposal cash, not an extra product margin. A recurring DCF case should state whether disposals are part of the investment policy and avoid counting an asset sale while also assuming uninterrupted use of that asset.
Stress product costs without assuming an immediate price recovery
Illustration: increase the historical cost-of-sales basis by 1%, holding revenue, SG&A and other operating items fixed. This isolates cost pressure; it is not a commodity forecast, a hedging result or an assumed pass-through price increase.
| Measure | Historical basis | Illustrative case |
|---|---|---|
| Cost of sales | 43,066 | 43,496.7 |
| Gross profit | 50,859 | 50,428.3 |
| Operating profit | 11,498 | 11,067.3 |
The exact pre-tax operating reduction is $430.66 million. A full case needs to specify the timing of any pricing response, its effect on unit demand, supplier payments and inventory. The operating effect is not automatically an equal current-year cash or equity-value change.
Keep interim reporting separate from the annual basis
Q3 2026 covers 2026-06-14 through 2026-09-05 and was released 2026-10-08. Revenue was $25,274 million in this quarter. Source: official Q3 2026 results.
The September-ending interim quarter and December-ending fiscal year have different lengths. Do not annualize the quarter or combine its organic-growth description with reported annual dollar totals as if they were one consistent series.
Turn the financial basis into a DCF case
| Decision | Treatment |
|---|---|
| Demand | Separate unit volume, net price/mix and currency within the divisional operating case. |
| Cost | Model inputs, production and distribution support on the same population as revenue. |
| Cash conversion | Reconcile promotion, customer collection, inventory, supplier payments and special cash obligations. |
| Investment | Distinguish gross capex from disposal proceeds and from acquisitions; retain the assets needed by the terminal case. |
| Valuation | Use explicit operating tax and investor-cash definitions, then reconcile valuation-date financing claims, cash and dilution. |
A conventional enterprise cash bridge uses operating earnings after assumed operating tax, appropriate non-cash adjustments, reinvestment and changes in operating funding. Starting from reported operating cash requires a financing and tax reconciliation. A terminal case should fund the production and distribution capacity supporting its assumed volume, rather than treating every reported disposal as recurring operating cash.
The PepsiCo company analysis explains the wider operating context. Use the company forecast tool and DCF calculator with explicit assumptions. Use the historical financials to define an explicit operating and reinvestment case, then supply valuation-date capital costs, claims and diluted shares. Check that each cash claim is counted once before deriving a per-share value.
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