Using an unlevered Free Cash Flow to Firm (FCFF) model, we project PepsiCo, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 4.9% to 5.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 42, DPO 98, DIO 46). At a 6.1% WACC with mid-year discounting, the terminal value (86% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 19.1x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $232.23 per share, suggesting PEP is undervalued by 53.4% at the current price of $151.37.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 12,461 | 12,853 | 13,318 | 13,511 | 14,222 | 14,577 |
| (−) Net Interest | 1,285 | 1,326 | 1,374 | 1,394 | 1,467 | 1,504 |
| (+) D&A | 5,017 | 5,210 | 5,322 | 5,414 | 5,563 | 5,702 |
| EBITDA | 18,763 | 19,389 | 20,013 | 20,319 | 21,252 | 21,783 |
| (−) Tax | 2,398 | 2,473 | 2,562 | 2,600 | 2,736 | — |
| (−) CapEx | 5,592 | 5,768 | 5,976 | 6,063 | 6,382 | — |
| (−) ΔWC | -785 | 153 | 181 | 76 | 277 | — |
| Free Cash Flow (FCF) | 11,558 | 10,995 | 11,293 | 11,580 | 11,856 | — |
| Peers' EBITDA Multiple | 19.1x | |||||
| Terminal Value | 416,927 | |||||
| WACC / Discount Rate | 6.10% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 11,221 | 10,061 | 9,740 | 9,413 | 9,083 | 310,104 |
| Enterprise Value | 359,621 | |||||
| Projection Period | 49,517 | 13.8% | ||||
| Terminal Value | 310,104 | 86.2% | ||||
| (−) Current Net Debt | 40,742 | |||||
| Equity Value | 318,879 | |||||
| (÷) Outstanding Shares | 1373M | |||||
| Fair Price | $232 | +53.4% | ||||
| WACC \ EV/EBITDA Exit Multiple | 15.1x | 17.1x | 19.1x | 21.1x | 23.1x |
|---|---|---|---|---|---|
| 4.1% | $205 | $231 | $256 | $282 | $308 |
| 5.1% | $195 | $219 | $244 | $269 | $294 |
| 6.1% | $185 | $209 | $232 | $256 | $279 |
| 7.1% | $176 | $199 | $221 | $244 | $266 |
| 8.1% | $168 | $189 | $211 | $232 | $254 |
Current price: $151.37. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.