PepsiCo Earnings: Brand Resonance and Price Mix Management Support Growth; Shares Undervalued

We plan to raise our $176 fair value estimate for PepsiCo by a low-single-digit percentage after absorbing better-than-expected third-quarter results driven by snack and beverage innovations, flexible channel strategy, and efficiency gains. Organic revenue grew 9% and adjusted EPS was up 15%, both outpacing our estimates of 8% and 12%, respectively. We are maintaining our 10% organic sales growth projection for 2023 while tweaking our adjusted EPS growth estimate to 11% from 10% on better margins. Our 10-year projections for mid-single-digit sales growth and high-single-digit EPS expansion remain in place. Shares look undervalued trading at a 6% discount, and we suggest long-term investors consider buying this wide-moat name.