On the four Ms, PepsiCo Inc. earns 82 for management and 42 for moat. The management score rests on a return on invested capital of 13.3% and a gross margin of 54.1% — figures that describe a business turning capital into profit efficiently. The balance sheet carries debt at 2.45x equity, which magnifies both the returns above and the risk beneath them. A moderate moat alongside exceptional management is a combination worth understanding before the price matters at all.
Three independent anchors set the price worth paying. Growth is modelled at 5.9% a year, the rate measured from the filings. The exit multiple assumed is 11.9x. That produces an intrinsic value of $39.94, a 10-CAP price of $76.95 and a payback time price of $80.52, with the value zone set at the highest of the three, $80.52. Today's price of $125.60 is 56% above it.
The price is above the value zone and the business scores 42 for moat and 82 for management. Neither test argues for paying up here.
| Price | $125.60 |
| Market cap | $171.6B |
| P/E ratio | 16.5x |
| Return on invested capital | 13.3% |
| Gross margin | 54.1% |
| Debt to equity | 2.45x |
| Free cash flow yield | 3.9% |
| Growth rate used | 5.9% |
| Growth rate measured | 6.0% |
| Exit multiple assumed | 11.9x |
| Company | Moat | Buy price |
| Monster Beverage Corp. (MNST) | 96 | $15.27 |
| Coca-Cola Europacific Partners (CCEP) | 56 | $184.75 |
| Keurig Dr Pepper (KDP) | 40 | $17.52 |
| The Coca-Cola Company (KO) | 53 | $39.26 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of PepsiCo Inc. rather than accepting ours.