PepsiCo Inc. (PEP) shares its plan with investors for the coming year. Investing in new businesses, reducing buybacks, and partnering with them for new niches forms the new strategy.
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A decline in PepsiCo profits can be attributed to its continued investment in several business areas, including manufacturing, supply, and IT. According to the management, as the company continues to invest, earnings pressure won’t disappear anytime soon. More specifically, PepsiCo announced several times that it intended to expand its consumers’ demographics and enter new markets.
A key reason for PepsiCo’s continued spending on share buybacks will be investing at scale. A year ago, the company spent only two billion dollars on buybacks, down a billion from the previous year. The company does not expect to increase payments in 2021 since it intends to improve its financial position after an unstable sales year. With low-interest rates in 2020, the company increased its cash reserves significantly. Reducing the buyback amount is an opportunity to continue growing dividends without increasing debt.
This year, PepsiCo Inc (PEP) announced a partnership with meat substitute product manufacturer Beyond Meat (NASDAQ: BYND). Co-branded products are expected to emerge soon, which could create a new growth point. Vegetable meat substitutes are becoming increasingly popular. PepsiCo is probably looking forward to offering its snack options to a new category of users.
We should point out that before investing in sugar substitute brands, our company also invested in brands with sugar substitutes. As a result, PepsiCo is creating an entire line of foods geared toward healthy eating. Growing numbers of consumers seek out healthy products that do not harm the body.
The top line for PepsiCo will most likely continue to grow despite some cost increases. In the coming years, recent investments will lead to more significant profit growth.
On the 18th of February, PepsiCo Inc (PEP) shares hit a high of $135.70 after trading at 0.68% higher. Before yesterday’s trading session, the prices ranged between $133.91 and $135.70. The shares of the company are below the target price of $153.75 by -13.58%. The market capitalization of the company is $188.61 billion.
