PepsiCo Inc. (NASDAQ:PEP)

Current Income Tax Expense

The current income tax expense shows an increasing trend over the analyzed periods. It starts at 1,757 million US dollars in 2020, slightly decreases to 1,701 million in 2021, then rises significantly to 2,410 million in 2022. This upward trend continues through 2023 and 2024, reaching 2,643 million and 2,694 million respectively. This indicates growing current tax liabilities, with a minor dip in 2021 as an exception.

Deferred Income Tax Expense

The deferred income tax expense exhibits greater volatility compared to the current tax expense. It increases from 137 million in 2020 to 441 million in 2021, which may reflect temporary differences leading to higher deferred tax liabilities or reduced deferred tax assets. However, from 2022 onwards, the values turn negative, indicating deferred tax benefits or reversals: -683 million in 2022, -381 million in 2023, and -374 million in 2024. The decrease in the magnitude of the negative values from 2022 to 2024 suggests a partial stabilization but still represents an overall negative deferred tax impact during these years.

Provision for Income Taxes

The total provision for income taxes, combining current and deferred expenses, fluctuates but generally increases over the period. It rises from 1,894 million in 2020 to 2,142 million in 2021, then drops noticeably to 1,727 million in 2022. Following this decrease, the provision increases again to 2,262 million in 2023 and further to 2,320 million in 2024. The dip in 2022 appears to be driven by the significant negative deferred tax component during that year. Overall, the provision reflects both the upward trend in current tax expense and the volatility in deferred tax, leading to moderate fluctuations in total tax provision.

U.S. Federal statutory tax rate

The U.S. Federal statutory tax rate remained constant at 21% throughout the entire period analyzed, showing no variation or adjustment year over year.

State income tax, net of U.S. Federal tax benefit

This component exhibited fluctuations, initially decreasing from 1.2% in 2020 to 1% in 2021, then rising to 1.8% in both 2022 and 2023, before dropping again to 1.3% in 2024. This suggests variability in state-level tax impacts net of federal benefits during the period.

Lower taxes on foreign results

The proportion attributed to lower taxes on foreign results consistently increased in absolute negative terms, going from -0.8% in 2020 to -1.6% in 2021, then slightly improving to -1.5% in 2022, followed by a more pronounced decrease to -2.5% in both 2023 and 2024. This trend indicates a growing influence of favorable foreign tax treatments on the overall tax rate.

One-time mandatory transition tax, TCJ Act

This tax item appeared only in 2021 and 2022, with values of 1.9% and 0.8% respectively, and was absent in other years. Its presence corresponds to one-time tax effects, adding to the total tax rate during these years.

Juice Transaction

The Juice Transaction effect was noted as a negative tax impact in 2022 (-2.4%) and then nearly neutral in 2023 (-0.1%), with no recorded effects in other years. This suggests a significant one-time tax benefit attributed to this transaction mainly in 2022.

Tax settlements

A notable negative tax effect of -3% appeared only in 2022, indicating a one-time tax settlement favorably impacting the tax rate during that year, with no such effects in others.

Other, net

This miscellaneous category showed stable minor negative impacts on the tax rate, fluctuating narrowly between -0.6% and -0.4% across the years, reflecting relatively consistent small adjustments.

Annual tax rate

The overall annual tax rate demonstrated variability over the years analyzed. It started at 20.9% in 2020, then increased to a peak of 21.8% in 2021, before declining significantly to 16.1% in 2022, followed by a rebound to 19.8% in 2023 and a slight decrease to 19.4% in 2024. The substantial decrease in 2022 correlates with several one-time and transaction-related tax benefits that year, while the rates in other years are closer to the statutory base rate adjusting for ongoing tax effects.

Net Carryforwards

The net carryforwards increased from $5,008 million in 2020 to a peak of $6,877 million in 2023, followed by a slight decline to $6,737 million in 2024. This reflects a general positive trend in deferred tax assets available for future tax relief.

Intangible Assets Other Than Nondeductible Goodwill

These assets grew steadily from $1,146 million in 2020 to $1,758 million in 2023, before decreasing marginally to $1,599 million in 2024. The increase indicates ongoing investment or revaluation of intangible assets, with a slight pullback in the most recent year.

Share-Based Compensation

Share-based compensation showed consistent growth, starting at $90 million in 2020 and rising to $148 million in 2024. This upward trend suggests increased employee compensation through equity incentives over the period.

Retiree Medical Benefits

There was a gradual decline in retiree medical benefits from $153 million in 2020 to $104 million in 2024, indicating reduced obligations or cost management in this area.

Other Employee-Related Benefits

Values fluctuated with a slight upward tendency, starting at $373 million in 2020, dipping slightly, and reaching $415 million in 2024. This indicates moderate variability but an overall increase in these benefit costs.

Pension Benefits

Reported only in 2020 at $80 million, with no data in subsequent years, limiting trend analysis.

Deductible State Tax and Interest Benefits

These benefits rose steadily from $150 million in 2020 to $202 million in 2024, reflecting increasing deductible tax and interest claims.

Lease Liabilities

Lease liabilities showed a clear and consistent increase from $371 million in 2020 to $773 million in 2024, indicating either new lease obligations or revaluation of existing leases.

Capitalized Research and Development

Absent in earlier years, capitalized R&D emerged at $150 million in 2022, growing to $256 million by 2024, signifying increased capitalization of R&D expenditures.

Other Assets (Positive)

These assets increased from $866 million in 2020 to a peak of $1,050 million in 2022, then declined somewhat to $948 million in 2024, suggesting variability in less clearly defined asset categories.

Gross Deferred Tax Assets

There was a steady increase from $8,237 million in 2020 to $11,375 million in 2023, slightly decreasing to $11,182 million in 2024. This trend indicates overall growth in deferred tax assets before valuation adjustments.

Valuation Allowances

Valuation allowances deepened significantly from negative $4,686 million in 2020 to negative $6,478 million in 2023, before improving slightly to negative $6,185 million in 2024. The larger allowances in 2023 suggest increased conservatism or uncertainty regarding realizability of deferred tax assets.

Deferred Tax Assets, Net

Net deferred tax assets grew from $3,551 million in 2020 to $4,897 million in 2023, with a marginal increase to $4,997 million in 2024, demonstrating an overall strengthening of net deferred tax asset positions.

Debt Guarantee of Wholly-Owned Subsidiary

Held constant at negative $578 million throughout the entire period, indicating a steady offset related to guaranteed liabilities.

Property, Plant and Equipment (PP&E)

PP&E liabilities increased in magnitude (negative values), from negative $1,851 million in 2020 to negative $2,126 million in 2022, then receded somewhat to negative $1,868 million in 2024, indicating fluctuations in net property asset values or related deferred taxes.

Recapture of Net Operating Losses

This item remained relatively stable at about negative $500 million, showing little change or volatility in net operating loss recapture obligations.

Pension Liabilities

The pension liabilities decreased from negative $216 million in 2021 to negative $112 million in 2024, reflecting a reduction in pension fund deficits or related obligations.

Right-of-Use Assets

Similar to lease liabilities, right-of-use assets showed increasing negative values from negative $371 million in 2020 to negative $772 million in 2024, consistent with growing lease commitments on the balance sheet.

Investment in TBG

Investment in TBG appeared as negative values in 2022 and 2023, with amounts of negative $186 million and negative $93 million respectively, before disappearing from the reported data, indicating divestment or write-down in this investment.

Other Liabilities (Negative)

Other liabilities fluctuated negatively between negative $159 million in 2020 and negative $350 million in 2023, then improved to negative $301 million in 2024, indicating variable but significant other liabilities.

Deferred Tax Liabilities

Deferred tax liabilities increased in magnitude from negative $3,463 million in 2020 to negative $4,337 million in 2022, then slightly declined to negative $4,119 million in 2024, reflecting changes in taxable temporary differences.

Net Deferred Tax Assets (Liabilities)

This metric fluctuated notably, dipping from $88 million in 2020 to negative $516 million in 2021, before recovering consistently to reach $878 million in 2024. This suggests volatility in net deferred tax positions but an improving outlook by the end of the period.

The financial data reveals the following trends in the deferred tax assets and liabilities over the five-year period:

Deferred tax assets

Deferred tax assets show a somewhat fluctuating pattern. Starting at $4,372 million in 2020, they decreased marginally to $4,310 million in 2021, followed by a further decline to $4,204 million in 2022. However, there was a notable increase in 2023 to $4,474 million, after which the value slightly retreated to $4,362 million in 2024. Overall, the deferred tax assets demonstrate a general stability with some minor variability over the period.

Deferred tax liabilities

Deferred tax liabilities exhibit a more pronounced downward trend across the five years. Initially, liabilities increased from $4,284 million in 2020 to $4,826 million in 2021. Thereafter, a continuous decrease is observed with values declining to $4,133 million in 2022, $3,895 million in 2023, and further down to $3,484 million in 2024. This steady reduction suggests either a strategic effort to reduce deferred tax liabilities or changes in the underlying temporary differences or tax regulations impacting these figures.

Comparative insights

Deferred tax assets remain relatively stable while deferred tax liabilities have decreased over the period. This narrowing gap between deferred tax assets and liabilities may positively influence the company’s net tax position in the long term. The trends suggest effective management of tax-related timing differences, with the liabilities decreasing consistently, potentially improving overall financial health regarding tax obligations.

Total Assets

The reported total assets remained relatively stable from 2020 to 2022, fluctuating slightly between approximately $92.2 billion and $92.9 billion. There was a noticeable increase in 2023, with assets reaching about $100.5 billion, followed by a slight decrease to $99.5 billion in 2024. The adjusted total assets showed a parallel pattern, starting at roughly $88.5 billion in 2020 and holding steady through 2022. Like the reported figures, the adjusted assets rose significantly in 2023 to $96.0 billion and experienced a minor decline to about $95.1 billion in 2024. This pattern suggests a period of asset growth in 2023 after a few years of stability, with a slight contraction afterward.

Total Liabilities

Reported total liabilities trended downward from $79.4 billion in 2020 to about $74.9 billion in 2022, indicating a reduction in obligations over this period. However, liabilities increased sharply in 2023 to $81.9 billion before decreasing marginally to $81.3 billion in 2024. The adjusted liabilities follow a similar downward trend through 2022, falling from $75.1 billion to $70.8 billion, with a notable rise in 2023 to $77.9 billion, sustaining relatively stable levels into 2024. This suggests that after a multi-year period of liability reduction, there was a strategic or market-driven increase in liabilities around 2023, followed by stabilization.

Common Shareholders’ Equity

Reported common shareholders’ equity demonstrated consistent growth from $13.5 billion in 2020 to $18.5 billion in 2023, before experiencing a slight reduction to $18.0 billion in 2024. The adjusted equity figures increased steadily from $13.4 billion in 2020 to $17.9 billion in 2023, followed by a decrease to $17.2 billion in 2024. This steady rise over the initial years reflects strengthening equity positions, potentially driven by retained earnings and capital contributions, with a minor reversal in the latest year possibly due to dividends, share repurchases, or changes in valuation.

Net Income Attributable to PepsiCo

Reported net income showed a positive trend, increasing from $7.1 billion in 2020 to $9.6 billion in 2024, with a steady annual rise each year except for a small slowdown in growth between 2022 and 2023. The adjusted net income similarly increased, starting at $7.3 billion in 2020 and reaching $9.2 billion in 2024, although the growth rate between 2021 and 2022 was less pronounced in comparison to other periods. The consistency in net income growth across both reported and adjusted figures indicates sustained profitability improvements over the five years.

Overall Insights

The data reflects a company that experienced consistent asset and equity growth with a notable increase in total assets and liabilities in 2023. The liability increase suggests more leverage or obligations undertaken, possibly to finance asset growth or operational needs. Shareholders’ equity growth has been steady but showed signs of a slight retreat in the most recent year. Profitability measured by net income has increased consistently, supporting the equity growth observed. Adjustments for deferred income taxes appear to slightly moderate the magnitude of assets, liabilities, equity, and net income but follow similar trends, confirming the stability of the underlying financial performance.

Net Profit Margin

The reported net profit margin demonstrated moderate fluctuation, starting at 10.12% in 2020, dipping to a low of 9.59% in 2021, and then increasing to 10.43% by 2024. The adjusted net profit margin showed a slightly different pattern, declining from 10.31% in 2020 to 9.5% in 2023 before recovering to 10.02% in 2024. This indicates some variability in profitability when accounting for deferred income tax adjustments, though the overall margin remains relatively stable around 10%.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios exhibited a general upward trend across the reviewed periods. The reported ratio increased from 0.76 in 2020 to 0.92 in 2024, while the adjusted ratio rose from 0.79 to 0.97 in the same timeframe. These figures suggest an improvement in asset utilization efficiency, indicating the company is generating more revenue per dollar of assets over time.

Financial Leverage

Financial leverage ratios showed a declining trend initially, with the reported ratio decreasing from 6.91 in 2020 to 5.38 in 2022 and slightly increasing to 5.51 by 2024. The adjusted leverage followed a similar pattern, dropping from 6.62 to 5.15 before climbing modestly to 5.54. This suggests the company reduced its reliance on debt or other leverage sources during the early years, then stabilized its leverage position in the latter years.

Return on Equity (ROE)

Reported ROE started at a high level of 52.92% in 2020, declined to 47.48% in 2021, rebounded to 51.96% in 2022, and settled at 53.09% in 2024. Adjusted ROE exhibited a similar but less volatile trend, moving from 54.29% in 2020 down to a low of 48.17% in 2022 before increasing to 53.63% in 2024. These figures reflect strong and relatively consistent returns to equity holders, with some impact noted from deferred tax adjustments.

Return on Assets (ROA)

Reported ROA showed a generally upward trend, rising from 7.66% in 2020 to a peak of 9.67% in 2022, with a slight dip in 2023 at 9.03%, before recovering to 9.63% in 2024. The adjusted ROA followed a similar trajectory, improving from 8.2% to 9.68% over the period. This upward movement indicates increasing effectiveness in utilizing assets to generate profits, supported by improved operational performance and asset management.

The financial data reveals several important trends regarding the net income and profit margins over the five-year period analyzed.

Net Income

Both reported and adjusted net income attributable to the company show a general upward trend, indicating growth in profitability. Reported net income increased from 7,120 million US dollars in 2020 to 9,578 million US dollars in 2024. Adjusted net income also showed consistent growth, rising from 7,257 million US dollars in 2020 to 9,204 million US dollars in 2024. The divergence between reported and adjusted figures is relatively small but widening, suggesting an increase in adjustments related to tax or other items.

Net Profit Margins

Reported net profit margin exhibited fluctuations but remained close to 10%, moving from 10.12% in 2020 to 10.43% in 2024. Specifically, it declined slightly in 2021 to 9.59%, improved in 2022 to 10.31%, dipped again in 2023 to 9.92%, and then recovered in 2024. The adjusted net profit margin demonstrated a different pattern; it decreased from 10.31% in 2020 to a low of 9.5% in 2023, before rising again to 10.02% in 2024. This indicates some variability in profitability margins when considering tax adjustments, with a notable dip in the middle years.

Overall, the data suggests that the company has improved its absolute profitability over time, with net income steadily increasing. Profitability margins show some volatility but tend to stabilize around the 10% level by the latest period. The adjusted net income and profit margin maintain trends similar to the reported figures, reflecting adjustments impacting reported profitability but not altering the overall positive earnings trajectory.

Reported Total Assets

The reported total assets remained relatively stable from 2020 through 2022, showing a slight decrease from 92,918 million to 92,187 million US dollars. Thereafter, a notable increase occurred in 2023, rising to 100,495 million US dollars, followed by a minor decrease to 99,467 million in 2024. This suggests a phase of asset expansion in 2023 with a slight contraction afterward.

Adjusted Total Assets

Adjusted total assets followed a similar pattern to reported figures but consistently showed lower values. From 88,546 million US dollars in 2020, adjusted assets stayed relatively flat until 2022, with a modest fall to 87,983 million. Subsequently, there was a significant increase in 2023 to 96,021 million, followed by a slight decline to 95,105 million in 2024. This indicates adjustments to the asset base, possibly reflecting deferred tax effects or other accounting considerations, yet the overall trend mirrors the reported asset changes.

Reported Total Asset Turnover

The reported total asset turnover ratio exhibited an upward trend from 0.76 in 2020 to 0.94 in 2022, indicating enhanced efficiency in asset utilization to generate revenue. In 2023, turnover declined slightly to 0.91 but rebounded to 0.92 in 2024, maintaining a level higher than the early period. This indicates that despite variations in asset base size, asset productivity remained generally strong.

Adjusted Total Asset Turnover

The adjusted total asset turnover mirrored the reported turnover trend but consistently showed somewhat higher ratios. Starting at 0.79 in 2020, the adjusted turnover increased steadily to 0.98 by 2022. A slight decline occurred in 2023 to 0.95, followed by a minor rise to 0.97 in 2024. This suggests that when accounting for adjustments related to deferred income tax and other factors, the asset efficiency is slightly better than reported figures imply.

Total Assets

The reported total assets remained relatively stable between 2020 and 2022, showing a slight decline from 92,918 million US dollars in 2020 to 92,187 million US dollars in 2022. A noticeable increase occurred in 2023, rising to 100,495 million US dollars, followed by a minor decrease to 99,467 million US dollars in 2024. The adjusted total assets follow a parallel pattern, decreasing marginally from 88,546 million US dollars in 2020 to 87,983 million US dollars in 2022, then increasing sharply to 96,021 million US dollars in 2023, with a subsequent slight reduction to 95,105 million US dollars in 2024.

Shareholders' Equity

Reported total common shareholders’ equity displayed consistent growth over the five-year period, increasing from 13,454 million US dollars in 2020 to a peak of 18,503 million US dollars in 2023, before a slight reduction to 18,041 million US dollars in 2024. Adjusted equity follows a similar upward trend, rising steadily from 13,366 million US dollars in 2020 to 17,924 million US dollars in 2023, then declining to 17,163 million US dollars in 2024. The trends suggest a general strengthening of equity capital over the period, with marginal corrections in the final year.

Financial Leverage

The reported financial leverage ratio indicates a clear downward trend from 6.91 in 2020 to 5.38 in 2022, suggesting reduced reliance on debt or increased equity financing. This ratio then increases slightly to 5.43 in 2023 and continues to 5.51 in 2024, indicating a modest rise in leverage after previous declines. The adjusted financial leverage ratio mirrors this pattern, decreasing from 6.62 in 2020 to 5.15 in 2022, followed by increments to 5.36 in 2023 and 5.54 in 2024. The consistency between reported and adjusted leverage ratios reinforces the observation of an initial deleveraging phase, succeeded by modest leverage increases in recent years.

Overall Interpretation

The data reflects stability and growth in equity alongside relatively stable asset bases, with a notable asset increase in 2023. The reduction in financial leverage through 2022 signifies a conservative capital structure shift, while the subsequent slight increase points to a moderated return to greater leverage. Adjusted figures remain closely aligned with reported values, confirming robustness in the financial positioning and capital structure trends observed.

The financial data reflects overall positive trends in key profitability and equity metrics with some fluctuations across the annual periods analyzed.

Net Income

The reported net income attributable to the company showed a consistent upward trajectory over the five-year span, increasing from 7,120 million USD in 2020 to 9,578 million USD in 2024. The adjusted net income, which accounts for deferred taxes and other adjustments, followed a similar increasing trend but with less pronounced growth between 2021 and 2022. The adjusted figures start higher than reported in 2020 and maintain a gap each year, indicating the adjustments tend to increase reported profitability slightly.

Total Shareholders’ Equity

Reported total common shareholders' equity rose from 13,454 million USD in 2020 to a peak of 18,503 million USD in 2023 before slightly declining to 18,041 million USD in 2024. The adjusted equity figures also increased initially but exhibited a mild decrease in the final year, ending at 17,163 million USD. This pattern suggests some equity fluctuations possibly related to accounting adjustments or market factors in the most recent periods.

Return on Equity (ROE)

The reported ROE percentage showcased strong performance with values above 47% each year, peaking at 53.09% in 2024. The highest reported ROE was in 2020 at 52.92%, experienced a dip in 2021, and rebounded steadily thereafter. Adjusted ROE followed a similar trend but was generally slightly higher initially and then converged closely with reported ROE towards the later years. Both reported and adjusted ROE indicate robust returns on shareholders’ equity, reflecting effective profitability despite some variability.

In summary, the data reveal strong, consistent growth in net income and equity with fluctuating yet generally high returns on equity. The adjustments made to reported figures modestly influence income and equity values, highlighting the importance of such adjustments for a more comprehensive performance evaluation. The slight decreases in equity in 2024 and smoothing of ROE values suggest considerations for capital management or external impacts in the most recent fiscal period.

Net Income Trends

The reported net income attributable shows a consistent upward trajectory from 7,120 million US dollars in 2020 to 9,578 million US dollars in 2024. Adjusted net income also follows a similar pattern, increasing steadily from 7,257 million US dollars in 2020 to 9,204 million US dollars in 2024, though with a relatively smaller year-over-year growth rate in 2022 compared to the other years.

Total Assets Trends

Reported total assets exhibit minor fluctuations, starting at 92,918 million US dollars in 2020, dipping to 92,187 million in 2022, and then rising sharply to 100,495 million in 2023 before slightly decreasing to 99,467 million in 2024. Adjusted total assets follow a similar pattern but at lower absolute levels, moving from 88,546 million US dollars in 2020 to 95,105 million in 2024, showing a notable increase between 2022 and 2023.

Return on Assets (ROA) Analysis

Return on assets, for both reported and adjusted figures, generally improved over the period. The reported ROA increased from 7.66% in 2020 to 9.63% in 2024, with the highest value recorded in 2022 at 9.67%. Adjusted ROA also rose from 8.20% to 9.68% over the same period, reflecting consistent improvement in asset utilization and profitability. The adjusted ROA remains consistently higher than the reported ROA each year.

Overall Insights

The financial data suggests a positive growth trend in profitability, as evidenced by rising net income and improving ROA figures. The improvement in adjusted net income and ROA indicates effective management of tax adjustments and expense recognition. The fluctuation in total assets, particularly the increase in 2023, may reflect strategic asset acquisitions or revaluations. The consistent gap where adjusted figures show higher profitability ratios suggests that adjustments for deferred and annual income taxes positively impact the financial performance indicators.