PAS Investment Analysis Report & Stock Research, PepsiAmericas, Inc.

Ockham's Rating/Recommendation Summary

Rating specific information requires Premium Access.
Buy Now or Learn More about Ockham's Features and Services.

PAS Revenue

As a value investing shop, we are interested in seeing how PAS's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 0.92x and the low end of the range at 0.56x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for PAS of 0.78x is above its historical average only slightly. So, while not a major concern it is worth noting that from a value perspective PAS does not look undervalued on a Price to Sales basis. However, were the Price to Sales ratio to drop by 5% (the historical average) then we would become more positive on this stock.

PAS Cash Earnings

As the old saying goes, "Cash is King!" We look at reported Cash Earnings, but the main emphasis of our analysis involves stripping out non-cash events such as depreciation from our cash earnings analysis. This helps us view the cash flows more clearly. Nevertheless, an analysis of Cash Earnings (both reported and otherwise) is absolutely pivotal to assessing a company's value, and currently PAS is significantly above its historical average multiple of Cash Earnings. Looking at the last 10 years we can get a good understanding of what investors have grown to expect from PAS. For example, PAS's Cash Earnings ratio per share has fluctuated between 6.25 and 10.32 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where PAS is with respect to prior business periods.

Therefore, at the current price of $29.01 and a Price to Cash Earnings ratio of 9.80, PAS is significantly overvalued. This diminishes the attractiveness of PAS until we see either a significant increase in cash earnings or a decline in price. A decline of the Price to Cash Earnings ratio of 18% is needed just to return to the historical cash earnings multiple.

PAS Dividends

A strong dividend payment history is looked upon as a favorable characteristic on a company’s future and potentially can receive a positive Ockham rating. That being said, we don't require dividend payments for company's whose management has elected to forgo them entirely.

When reviewing dividend yields for PAS, we compare the historic high and low levels over the past, which is similar to our evaluation of Sales and Cash Earnings per share. Paying a dividend is not necessary for any company, but changes in dividend often can lend clues as to the health of the business. A rising dividend is a strong sign for an established company, as it reflects management's confidence in the company. PAS’s estimated annual dividend is $0.56 resulting in a current dividend yield of 1.93%. The highest dividend yield from PAS over recent history was 3.74% while the lowest dividend yield was 0.23%. Management at PAS needs to get the current dividend yield above the historical median before we are comfortable from this point of view.