PepsiCo Hasn't Been This Cheap Relative to Free Cash Flow in 10 Years. Here's Why That's the Signal to Buy.
With plenty of spendable dollars at its disposal, the beverage company has a range of options to improve its overall business.
Overview
There are several ways of measuring a stock's value, each of which has its own pros and cons. Perhaps the best-known way is a ticker's price-to-earnings (or P/E) ratio, which simply compares that stock's price to its underlying per-share profit. A company's top goal is generating earnings, after all.
A reported per-share bottom line, however, isn't necessarily the only meaningful means of weighing what a stock's worth. Although it's not a commonly considered valuation metric, in certain cases, cash flow can mean even more than a reported earnings figure.
Details
To this end, on a free-cash-flow basis, shares of beverage company PepsiCo (NASDAQ: PEP) haven't been this cheap in a decade. You might want to dive in before other investors begin figuring it out.
Source
Originally published at www.fool.com.
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