VIEWS: 9 PAGES: 2 POSTED ON: 10/25/2011
Analysts: Christina Wagner Industry/Stock: Beverages Industry/ & Kelly Shea Pepsi Bottling Group Inc. (PBG) Pepsi Bottling Group Inc. (PBG): Buy Near 52 week high, but we think that it will continue to go up as we are expecting a recession. Small-Cap, Value stock, which fits our criteria. Has had earning surprises consistently every quarter for the past two years. Overall, it ranks best by price multiples out of all the companies in its industry and its industry is expected to do even better as the economy falls. Key Statistics (11/23/07) Key Ratios Price $41.72 PBG Industry Avg. Beta .70 P/E - Fwd 17.19 24.62 PEG 1.84 2.32 Market Cap 9.2 B Price/Book 3.90 6.91 52 Week Range 30.13 – 43.38 Price/Sales .69 4.03 EPS (ttm) 2.49 Price/Cash 7.44 19.05 Flow Key Executives Mr. John T. Cahill, 49 Executive Chairman of the Board Mr. Eric J. Foss , 48 Recent Developments CEO, Pres 11/06- The Pepsi Bottling Group receives the Green Mr. Alfred H. Drewes , 51 Power Leadership Award by the Environmental CFO and SVP Protection Agency showing that they are concerned for the economy and willing to make an effort to fix it. Mr. Yiannis Petrides , 49 10/03-Pepsi Bottling Group increases revenues by Pres of PBG Europe 7.8% and free cash flow increased 73% from the Mr. Robert C. King , 49 same period last year. They also boosted their Pres of PBG North America yearly outlook to earnings between $2.15 and $2.18 compared to their previous expectations of earnings Mr. Pablo Lagos , 51 between $2.02 and $2.07. Pres and Gen. Mang. of PBG Mexico Mr. Yiannis Petrides, 48 Pres. Of PBG Europe Mr. Steven M. Rapp, 53 SVP, General Counsel, and Secretary Analysts: Christina Wagner Industry/Stock: Beverages Industry/ & Kelly Shea Pepsi Bottling Group Inc. (PBG) Industry Industry Industry Analysis PBG Comparison Overview Oper. Profit Margin 8.33% 20.31% Non- Alcoholic Beverages are in the consumer non-cyclical sector. Industry companies sell Non-Alcoholic Net Profit Margin 4.38% 16.55% beverages such as soda, juice and water. Companies in this industry also include the bottlers of these products. ROE 24.96% 31.20% Evaluation Products are sold practically everywhere you go. ROA 5.34% 16.02% Industry sales are driven by needs of consumers. Economy is slowing down. Asset Turnover 1.03x .98x Higher gas prices and the slumping housing market will not undermine the spending of income on beverages. Return on Summary 6.09% 22.65% Investment Despite the slowing economy and the rising gas prices, consumers always buy beverages. Therefore, this industry will be doing exceedingly better than the rest of the market right now. Stock Analysis Overview Pepsi Bottling Group is involved in the manufacturing, selling, and distributing Pepsi-Cola and related beverages. Its customers are chain foodstores, supercenters, mass merchandisers, chain drug stores, club stores, and military bases, as well as independently owned shops and foodservice businesses. Company sells its products through direct store distribution system, wholesalers, and third- party distributors primarily in the United States, Mexico, Canada, Spain, Russia, Greece, and Turkey. Evaluation Beta of .70 may help balance out the volatility of other high beta stocks in the portfolio. Lower Valuation multiples show that the stock is undervalued compared to other companies in the industry. Has been trending upwards since March and has outperformed the S&P. PEG is close to the industry average. Summary Pepsi Bottling Group Inc. is a low beta stock that outperforms other stocks in its industry. We believe that it will continue to rise due to the fact that it is a staple and will therefore not be affected by the expected recession. The company is experiencing high growth rates through expansion and penetration in new markets such as Mexico, Russia, and Turkey. Important Disclaimer Student member of the University of Rhode Island Ram Fund class created this report, which intends to provide potential employers and other interested parties an example of the skills, knowledge and abilities of Ram Fund students. Members of the Ram Fund are not registered investment advisors, brokers or officially licensed financial professionals. The investment advice does not represent an offer or solicitation to buy or sell any of the securities mentioned. This report is not a complete compilation of data, and its accuracy is not guaranteed. From time to time, the University of Rhode Island, its faculty, staff, and student body, or the Ram Fund may hold a financial interest in the companies mentioned in this report.