Pepsico stock market price

Pepsico stock market price

Posted: Z-Realm Date: 01.07.2017

As of March , due to separate repurchase programs, PepsiCo has 1. PepsiCo has continued to increase its dividend annually, averaging 2. PepsiCo stock has not split in 20 years and the share price exceeds the range it traded in prior to previous share splits. In , it was suggested that PepsiCo might have an impending stock split. But it did not happen, and here I am in suggesting the time to do that may be now.

I may not be any better at prognostication, but the time for PepsiCo to execute a stock split may finally have arrived. How about a little context? Pepsi-Cola began in and the company known as PepsiCo NYSE: PEP was created in , with the merger of Pepsi-Cola and Frito Lay.

PEP stock quote - Pepsico, Inc. Common Stock price - nocuwahojopyx.web.fc2.com

Since then the company has seen four stock splits - , , and The first three splits were at owners of one share of stock became owners of three shares , with the last a split one share became two shares. It has now been 21 years since PepsiCo had its last stock split. Of course, whether talking about products, markets or health issues, comparisons of PepsiCo with Coca-Cola NYSE: KO are commonly expected. So, as it relates to stock splits, Coke split its stock in each of the same years PepsiCo did.

Stock splits are not everyday occurrences and many investors may be uncertain of the concept. It is, therefore, important to make it clear that despite a stock split that returns multiple shares for one, stock splits do nothing to change the market cap of the company, nor do they affect a firm's sales or earnings, or do they change the shareholders' value. There is a point for this recalibration.

Whether a forward or reverse split, the effort is aimed at restoring stock prices to a "normal range" with normal being relative to the individual company's stock highs and lows over a period of time. Managers often assert that a split makes a stock more liquid, which in turn should make it more valuable and, as documented by several studies, the number of a firm's shareholders usually increases after a forward split because the price is reduced and this induces buying.

In turn, this increases the transaction fees paid by investors, giving brokers more incentive to do research on and promote a given firm. In fact, as the research shows, security analyst coverage on a company increases after its stock splits. This raises some relevant questions.

Is PepsiCo due for a stock split? Is the reason for splitting shares today logical and compelling? Would the individual investor benefit from a PepsiCo stock split? It is important to be mindful that we are talking about PepsiCo completing a forward stock split. This is as opposed to a reverse stock split, which results in a reduction in the number of shares outstanding.

A reverse split is used when the share price of a firm has dropped to a very low level usually around the one dollar range and the company is at risk of being delisted from a major stock exchange.

Generally, a reverse split is seen as a negative action and is done to allow the company to continue to trade on one of the more reputable stock exchanges. However, a reverse for a small firm can allow them to increase the share price significantly enough to qualify for a larger exchange. Obviously, what we are talking about with PepsiCo is a forward stock split, usually just referred to as a stock split, and it is very different for entirely different reasons.

Although not seeking to produce an article for academics, it is still important to take a look at the academic research as a means to inform and ground this article, because that research reveals consistent evidence when looking at companies splitting stock in the US, Canadian, European, African, and Asian markets.

To begin with, the researchers generally agree that companies like it when individual investors buy their stock because individuals are generally considered more loyal to the company than institutional investors, and they also have greater self interest in the purchase decision. However, the higher a company's stock price rises, the fewer individual investors can afford to buy it because they tend to be wealth constrained. Therefore, by splitting their stock, firms make it more affordable and, thus, more attractive for the individual investor.

And, it is not merely that the lower post-split share price is attractive, it is that following a stock split we see an increase in the proportion of individual ownership and a reduction in the proportion of institutional ownership.

Also, there is a trading range hypothesis that suggests a stock split brings share prices into a preferred price range and company managers can justify stock splits on the basis that they improve liquidity and marketability.

Pepsico, Inc. Common Stock (PEP) Historical Prices & Data - nocuwahojopyx.web.fc2.com

In fact, the evidence re-affirms a link between positive abnormal returns of a stock and projected earnings growth. Moreover, companies for which stocks are split forward will see analysts revise earnings forecasts up by 2. Further, splits are found to increase the trading volume of shares and increase the daily number of traders.

Studies have also found that existing investors realize significant returns on and around the announcement dates of the stock split. Companies are aware of the price of their stock and how it may influence investor purchases.

For example, if you want to buy 10 shares of Apple NASDAQ: For 10 shares of Alphabet NASDAQ: And then there is Berkshire Hathaway NYSE: A , the granddaddy of all stock prices. Berkshire Hathaway would cost you more than a quarter of a million dollars for a single share though you can buy its tracking stock NYSE: While the value of a stock is due to many factors, it remains that higher prices restrict the access for the average investor and their related belief in higher returns.

And, while institutional investors remain entrenched and often project an undue influence on the actions of a company, the average investor is one that PepsiCo has traditionally sought to engage and, in no small part, it is why the company has paid dividends regularly and why it has bought back shares. Publicly traded companies and, most assuredly, multi-billion dollar blue-chip stocks , grow in value thanks to acquisitions, new product launches, and share repurchases.

PEP stock quote - Pepsico, Inc. Common Stock price - nocuwahojopyx.web.fc2.com

At some point, the quoted market value of the stock becomes too expensive for non-institutional investors to afford, which begins to influence the market liquidity , as there are fewer and fewer people capable of buying a share. Academic studies of the past thirty years have looked at the logic for stock splits and found markets generally react positively to the announcement of a stock split because they serve as a means to signal positive information to investors.

One common interpretation of this phenomenon is that by splitting the firm's stock, managers are attempting to signal to outsiders the belief that the firm's stock price will further increase. And, it usually does. It also helps realign the share price to make it more affordable.

Consequently, the ownership mix becomes broader because the lower post-split share price makes it easier for more individual investors to purchase shares. Finally, consideration of a stock split is justified when a company's shares are selling at a high price relative to its own history and when accompanied by healthy operating results and a strong financial condition. When these factors are further supported by anticipated growth as evidenced by a steady increase in earnings, dividends, book value and revenue, a strong foundation is in place for a stock split decision.

If we add in that the high share price has begun to exceed the reach of the small, individual investor, there is a strong argument that it is time for PepsiCo to execute a forward stock split.

PepsiCo is not a serial stock splitter. That is not why individual investors find it an attractive stock. Rather, a principal consideration for investing in PepsiCo has been the yield from the dividend, combined with marginal stock growth.

While different investors make a variety of assessments of a company's future prospects and therefore assign values to a stock that may differ, when one investor is willing to buy shares at a price at which another is willing to sell, then both see an opportunity from a trade; particularly when a stock has a lot of investor interest.

And, splitting a stock is one way to generate interest. However, as the old saying goes, "trading shares is hazardous to your wealth. Further, despite the longstanding and widespread financial advice to hold well-diversified portfolios, several studies find that many individual investors instead tend to concentrate their portfolios in a small number of stocks.

What might explain this? Research in cognitive psychology suggests that there are limits to human capacity for processing information and conducting more than a limited number of tasks at a time, and that such processing limitations might constrain human reasoning and problem solving as they relate to individual investment decisions.

Also affecting the performance of individual investors are specific attributes such as education, financial sophistication, risk aversion, susceptibility to behavioral biases, and any other observable or unobservable individual characteristics that do or do not change over time.

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Assuming that the availability of relevant information or the information processing skills of individual investors is limited, the argument is that they may be better off investing in a subset of stocks for which they have favorable knowledge and do not suffer the indignities of a disadvantage due to asymmetrical information.

Exacerbating the disadvantage of the individual investor is the access to high frequency trading by institutional investors that now comprises a large portion of trading volume on major exchanges; something that also affects individual investor trust in the exchanges. High frequency trading involves using sophisticated algorithms to exploit trading opportunities and the effects are broad. When individual investors are hesitant to put money into the stock market because of perceived disadvantages, the lower demand for equities drives up the cost of raising capital and slows down investment activity overall.

It also deters the individual investor because high-frequency trading is a set of computerized trading strategies characterized by extremely short holding periods; contrary to the longer holding periods consistent with the average individual investor. This informational disadvantage creates difficulty when individual investors realize they face a significant search problem when choosing stocks to buy.

Rather than searching systematically, many investors may consider only stocks that first catch their attention e. This will lead individual investors to buy attention-grabbing stocks. Consequently, a well-known company like PepsiCo splitting its stock is an attention grabber that engenders awareness and furthers interest in acquiring and holding that stock.

Clearly, this means that individual investors would be influenced by the media attention of a stock split, which causes a tendency to buy rather than sell the stock.

This is further evidence that a PepsiCo share split would be an attention-getting event that would engender greater investment by individual investors, both current and prospective shareholders. PepsiCo has sought growth over the past few years in clear and unambiguous ways. Moreover, the global operating model PepsiCo put in place beginning in has decreased management layers, promoted best practice sharing, and accelerated decision-making. It does its own version of zero-based budgeting and has reduced headcount and increased management spans of control over that time.

Without question, PepsiCo has shown itself to be fiscally prudent and its subsequent actions are reflected in increasing free cash flow FCF and a doubling of the share price since But, with all this good investor news, would PepsiCo actually consider a stock split? Some observers believe PepsiCo is valued because of its dividend and question if buybacks are the best use of its cash.

Some wonder whether the shares are overvalued. Still, others recognize that PepsiCo's free cash flow is increasing and PepsiCo is a cash generation machine that has benefited current shareholders. However, my question is whether it is time to become more inclusive rather than exclusive, whether PepsiCo should work to foster the growth of additional individual investors.

Liquidity is important, if not the most important element in the investment decision for individual investors. If optimum liquidity is measured by the relative ease and promptness with which a security may be traded with a minimum price change from the previous transaction, a stock split can help engender that liquidity.

pepsico stock market price

PepsiCo has historically been sensitive to the individual investor and, if a stated objective of a stock split is to lower the market price sufficiently in order to broaden marketability, generate a positive market reaction, and provide greater access to investors, PepsiCo is in a position to enable a new "Pepsi Generation" of shareholders, to create greater market enthusiasm and, perhaps, to reduce the noise from institutional investors.

All it needs to do is split the stock. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it other than from Seeking Alpha. I have no business relationship with any company whose stock is mentioned in this article. REITs Dividend Ideas Dividend Strategy Dividend News Dividend Quick Picks Editor's Picks.

Isn't It Time To Make Shares Less Expensive For The Smaller Investor? Summary As of March , due to separate repurchase programs, PepsiCo has 1. It has been argued the PepsiCo share price is becoming too expensive for the small investor. Background In , it was suggested that PepsiCo might have an impending stock split. Want to share your opinion on this article? Disagree with this article? To report a factual error in this article, click here.

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