We believe the company will need to show improved results from several of the key areas of strategic focus or there may be a new management team in place in the near future. The potential for the stock is less about the growth, which we think is mid-to high single-digit per year, and more about the combination of valuation and quality of business. - Donald Yacktman
Donald Yacktman has liked PepsiCo for some time but that seems a slightly less favorable assessment compared to previous ones by him and his team.
PepsiCo has some high quality businesses, but the execution on some fronts lately has been somewhat disappointing.
Earnings is expected to be down this year compared to last year. Using this year's number, PepsiCo is selling for nearly 16x earnings.
So, while not expensive (especially if an investor believes those earnings will begin to bounce back next year), it hardly seems like a bargain near the current valuation considering some of their recent difficulties.
A larger discount until they prove some things to shareholders seems warranted.
Check out the full article. In it, the co-managers at Yacktman Funds respond to a bunch of readers' questions.
Established a long position in PepsiCo at less than recent market prices