Massive Upside Could Come from Pepsi (PEP) Segment Split
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Price: $143.73 -0.41%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 4.2%
Revenue Growth %: +5.6%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 4.2%
Revenue Growth %: +5.6%
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PepsiCo (NYSE: PEP) could unlock a mess of value for investors should it decide on a monumental break-up of the company.
According to Bloomberg, Pepsi shareholders might see as much as 49 percent upside should Pepsi decide to split its Snack Foods and Soft Drinks businesses. One analyst sees shares hitting $90 with the division of the company, or a 49 percent jump.
Additionally, splitting up Pepsi's more profitable snack business from its soft drinks -- which have lost market share to rival Coca-Cola (NYSE: KO) -- could lead to a higher overall valuation.
Over the last year, Pepsi's market cap has fallen just over 10 percent to $95.6 billion. Peer Coca-Cola, on the other hand, has seen its market cap rise 21 percent from $133.9 billion to $162.2 billion over the same time period. Others like General Mills (NYSE: GIS), Danone, and Kellogg (NYSE: K) have seen gains over the last year, and S&P's Consumer Staples Index has also popped 10 percent.
On a sum-of-the-parts basis, Pepsi boasts a value of about $70 to $72 per share.
Company splits have been hot lately, with Kraft (NYSE: KFT) and Tyco International (NYSE: TYC) the latest making announcements. With Diet Coke recently ousting Pepsi-Cola as the number two soft drink choice in the U.S. last year, it may be time for Pepsi to start running leaner.
Pepsi is slightly higher Wednesday morning.
According to Bloomberg, Pepsi shareholders might see as much as 49 percent upside should Pepsi decide to split its Snack Foods and Soft Drinks businesses. One analyst sees shares hitting $90 with the division of the company, or a 49 percent jump.
Additionally, splitting up Pepsi's more profitable snack business from its soft drinks -- which have lost market share to rival Coca-Cola (NYSE: KO) -- could lead to a higher overall valuation.
Over the last year, Pepsi's market cap has fallen just over 10 percent to $95.6 billion. Peer Coca-Cola, on the other hand, has seen its market cap rise 21 percent from $133.9 billion to $162.2 billion over the same time period. Others like General Mills (NYSE: GIS), Danone, and Kellogg (NYSE: K) have seen gains over the last year, and S&P's Consumer Staples Index has also popped 10 percent.
On a sum-of-the-parts basis, Pepsi boasts a value of about $70 to $72 per share.
Company splits have been hot lately, with Kraft (NYSE: KFT) and Tyco International (NYSE: TYC) the latest making announcements. With Diet Coke recently ousting Pepsi-Cola as the number two soft drink choice in the U.S. last year, it may be time for Pepsi to start running leaner.
Pepsi is slightly higher Wednesday morning.
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