PepsiCo, Inc. doesn’t just refresh your palate; it revolutionizes the way we experience everyday moments through its innovative beverages and snacks. As a titan in the non-alcoholic beverage industry, PepsiCo has established an impressive portfolio, including beloved brands like Lay’s, Gatorade, and Tropicana. With a commitment to quality and sustainability, the company continually shapes consumer preferences and market trends. As we dive into the investment analysis, I invite you to consider whether PepsiCo’s fundamentals still support its current valuation and growth trajectory.
Table of contents
Company Description
PepsiCo, Inc. is a leading global food and beverage company, headquartered in Purchase, NY, and founded in 1898. The company operates across seven segments, including Frito-Lay North America and PepsiCo Beverages North America, offering a diverse array of products such as snacks, cereals, and beverages. With a market capitalization of $199B, PepsiCo is recognized as a dominant player in the non-alcoholic beverage industry, serving a wide range of customers from grocery stores to e-commerce platforms. Its strategic focus on innovation and sustainability positions PepsiCo as a key influencer in shaping industry trends and consumer preferences.
Fundamental Analysis
In this section, I will analyze PepsiCo, Inc.’s income statement, financial ratios, and dividend payout policy to assess its financial health and investment potential.
Income Statement
The following table outlines PepsiCo, Inc.’s income statement over the past several years, providing insights into the company’s financial performance and key metrics.
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Revenue | 70.37B | 79.47B | 86.39B | 91.47B | 91.85B |
| Cost of Revenue | 31.80B | 37.08B | 40.58B | 41.88B | 41.74B |
| Operating Expenses | 28.50B | 31.24B | 34.30B | 37.60B | 37.22B |
| Gross Profit | 38.58B | 42.39B | 45.82B | 49.59B | 50.11B |
| EBITDA | 13.22B | 14.90B | 14.92B | 15.75B | 16.68B |
| EBIT | 10.20B | 11.68B | 11.64B | 12.24B | 12.87B |
| Interest Expense | 1.13B | 1.86B | 0.94B | 0.82B | 0.92B |
| Net Income | 7.12B | 7.62B | 8.91B | 9.07B | 9.58B |
| EPS | 5.14 | 5.51 | 6.46 | 6.59 | 6.98 |
| Filing Date | 2021-02-11 | 2022-02-10 | 2023-02-09 | 2024-02-09 | 2025-02-04 |
Over the five-year period, PepsiCo has shown consistent growth in both Revenue and Net Income, with 2024 recording a slight increase in Revenue to 91.85B, up from 91.47B in 2023, and Net Income rising to 9.58B from 9.07B. This indicates a stable performance despite a challenging economic environment. The Gross Profit margin has remained relatively stable, reflecting effective cost management. In the most recent year, margins slightly improved, and EBITDA growth suggests operational efficiency, which is encouraging for potential investors. However, I advise maintaining caution as external factors may impact future growth.
Financial Ratios
The table below summarizes the financial ratios for PepsiCo, Inc. (PEP) over the last five years.
| Ratios | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Net Margin | 10.12% | 9.59% | 10.31% | 9.92% | 10.43% |
| ROE | 11.69% | 11.08% | 11.12% | 10.78% | 10.11% |
| ROIC | 9.78% | 9.56% | 9.55% | 9.27% | 8.93% |
| P/E | 28.85 | 31.51 | 27.98 | 25.75 | 21.80 |
| P/B | 15.27 | 14.96 | 14.54 | 12.63 | 11.57 |
| Current Ratio | 0.98 | 0.83 | 0.80 | 0.85 | 0.82 |
| Quick Ratio | 0.81 | 0.66 | 0.61 | 0.68 | 0.65 |
| D/E | 3.32 | 2.54 | 2.31 | 2.41 | 2.49 |
| Debt-to-Assets | 48.01% | 44.15% | 42.91% | 44.44% | 45.19% |
| Interest Coverage | 8.94 | 5.99 | 12.26 | 14.63 | 14.02 |
| Asset Turnover | 0.76 | 0.86 | 0.94 | 0.91 | 0.92 |
| Fixed Asset Turnover | 3.05 | 3.25 | 3.24 | 3.05 | 2.93 |
| Dividend Yield | 2.68% | 2.42% | 2.48% | 2.86% | 3.46% |
Interpretation of Financial Ratios
In the most recent year, PepsiCo’s financial ratios indicate a mixed performance. The net margin of 10.43% shows a slight improvement, while the P/E ratio of 21.80 suggests the stock is relatively fairly valued compared to historical data. However, the D/E ratio of 2.49 raises concerns about leverage, and a current ratio below 1 indicates potential liquidity issues.
Evolution of Financial Ratios
Over the past five years, PepsiCo’s financial ratios have shown gradual improvement in profitability metrics, such as net margin and dividend yield, while leverage ratios remain high. The current and quick ratios have remained relatively stable, indicating consistent liquidity management amid increasing debt levels.
Distribution Policy
PepsiCo, Inc. (PEP) maintains a robust dividend policy, with a 2024 dividend payout ratio of approximately 75%, reflecting a commitment to returning capital to shareholders. The annual dividend yield stands at about 3.46%. Additionally, the company has engaged in share buybacks, which can enhance shareholder value by reducing share dilution. However, potential risks include unsustainable distributions if earnings decline. Overall, this distribution strategy supports long-term shareholder value creation, provided that cash flow remains healthy.
Sector Analysis
PepsiCo, Inc. is a leading player in the non-alcoholic beverages sector, offering a diverse range of products including snacks and various beverages, facing competition from rivals like Coca-Cola. Its competitive advantages lie in its extensive distribution network and strong brand portfolio.
Strategic Positioning
PepsiCo, Inc. (PEP) holds a significant market share in the non-alcoholic beverage industry, driven by its diverse product segments, including Frito-Lay and Quaker Foods. With a market capitalization of approximately $199.4B, the company faces competitive pressure from rivals like Coca-Cola and emerging health-focused brands. Technological disruptions, particularly in e-commerce and supply chain efficiencies, are reshaping the industry landscape. PepsiCo’s adaptability and strong brand portfolio position it well to navigate these challenges effectively.
Key Products
Below is a table summarizing some of the key products offered by PepsiCo, Inc., which operates in the non-alcoholic beverage and snacks sector.
| Product | Description |
|---|---|
| Pepsi | A popular carbonated soft drink known for its refreshing taste. |
| Mountain Dew | A citrus-flavored soda with a high caffeine content. |
| Lay’s Potato Chips | A leading brand in the snack category, offering a variety of flavors. |
| Doritos | Tortilla chips available in various bold flavors. |
| Quaker Oats | A brand offering oatmeal and other breakfast products. |
| Gatorade | A sports drink designed to replenish electrolytes and fluids. |
| Tropicana | A fruit juice brand known for 100% pure orange juice and other flavors. |
| Aquafina | Bottled water that is widely recognized for its purity and quality. |
| Ruffles | A brand of ridged potato chips that come in various flavors. |
| Naked Juice | A line of smoothies and juices made from real fruit and vegetables. |
This overview highlights the diverse range of products PepsiCo provides, catering to various consumer preferences in the beverage and snack markets.
Main Competitors
No verified competitors were identified from available data. However, PepsiCo, Inc. (ticker: PEP) holds a significant position in the non-alcoholic beverages sector with an estimated market share of approximately 25% in North America. The company is a dominant player in the beverage and snack industry, leveraging its extensive product offerings and distribution networks to maintain its competitive edge.
Competitive Advantages
PepsiCo, Inc. (PEP) boasts a diverse product portfolio that includes popular snacks and beverages, providing resilience against market fluctuations. With a market cap of approximately $199.4B, the company has a strong presence in various global markets. Future growth opportunities lie in the expansion of healthier product lines and increased e-commerce distribution. Additionally, PepsiCo’s commitment to sustainability and innovation positions it well to capture emerging consumer trends, potentially enhancing its market share and profitability in the coming years.
SWOT Analysis
The following SWOT analysis provides a structured overview of PepsiCo, Inc.’s current strategic position.
Strengths
- Strong brand portfolio
- Global distribution network
- Diverse product offerings
Weaknesses
- Dependence on North American market
- Vulnerability to commodity price fluctuations
- High competition in the beverage sector
Opportunities
- Expansion in emerging markets
- Growth in health-conscious product lines
- E-commerce growth
Threats
- Regulatory challenges
- Changing consumer preferences
- Economic downturns
The SWOT analysis indicates that while PepsiCo has a robust brand and extensive market reach, it must navigate significant challenges, particularly in diversifying its market presence and responding to consumer trends. Strategic emphasis on innovation and market expansion will be crucial for sustained growth and risk management.
Stock Analysis
Over the past year, PepsiCo, Inc. (PEP) has experienced significant price movements, with notable fluctuations influencing trading dynamics. This week’s stock price chart reflects these changes and sheds light on the overall market sentiment.
Trend Analysis
The stock’s price has seen a decline of -13.02% over the past 12 months, indicating a bearish trend. Within the recent period from August 31, 2025, to November 16, 2025, the price change was -1.88%, which suggests a neutral trend since it falls within the -2% to +2% range. The stock has shown notable highs of 182.19 and lows of 129.07, with an acceleration in the bearish trend, as indicated by the standard deviation of 14.75.
Volume Analysis
Analyzing the trading volumes over the last three months, the average volume was approximately 37.03M, with buy volume averaging 16.68M and sell volume averaging 20.35M. This data indicates a seller-driven market, as the sell volume exceeds buy volume. The volume trend shows a bullish pattern, although recent trends have demonstrated a deceleration in buyer activity, suggesting cautious investor sentiment in the market.
Analyst Opinions
Recent analyst opinions on PepsiCo, Inc. (PEP) indicate a consensus rating of “Buy” for 2025. Analysts highlight the company’s strong return on equity (5) and return on assets (5), showcasing its effective management and profitability. The discounted cash flow score (4) further supports the positive outlook. However, concerns about the price-to-earnings (2) and price-to-book (1) ratios suggest caution. Analysts from firms such as Morningstar have emphasized PepsiCo’s solid fundamentals and growth prospects, making it a favorable addition to investment portfolios.
Stock Grades
PepsiCo, Inc. (PEP) has received various grades from reputable grading companies, reflecting a mix of opinions on its current market position.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Freedom Capital Markets | Downgrade | Hold | 2025-10-23 |
| Wells Fargo | Maintain | Equal Weight | 2025-10-10 |
| JP Morgan | Maintain | Neutral | 2025-10-06 |
| Barclays | Maintain | Equal Weight | 2025-10-03 |
| Citigroup | Maintain | Buy | 2025-09-25 |
| Wells Fargo | Maintain | Equal Weight | 2025-09-25 |
| UBS | Maintain | Buy | 2025-09-11 |
| RBC Capital | Maintain | Sector Perform | 2025-09-03 |
| Barclays | Maintain | Equal Weight | 2025-07-21 |
| Citigroup | Maintain | Buy | 2025-07-18 |
Overall, the recent trend indicates a cautious outlook for PEP, with a notable downgrade from Freedom Capital Markets to a “Hold” rating, while most other firms have maintained their previous grades. This suggests a mix of stability and caution among analysts regarding the stock’s performance.
Target Prices
The consensus among analysts for PepsiCo, Inc. (PEP) presents a balanced outlook.
| Target High | Target Low | Consensus |
|---|---|---|
| 164 | 140 | 150.5 |
Overall, analysts expect PepsiCo’s stock to reach a consensus target price of approximately 150.5, indicating a positive sentiment in the market.
Consumer Opinions
Consumer sentiment about PepsiCo, Inc. remains a mixed bag, reflecting both strong brand loyalty and areas for improvement.
| Positive Reviews | Negative Reviews |
|---|---|
| “Great taste and variety in products!” | “Pricing seems to be increasing too quickly.” |
| “I love the healthier snack options available.” | “Some flavors are inconsistent in quality.” |
| “Excellent customer service experience.” | “Packaging is not environmentally friendly.” |
Overall, consumer feedback indicates that while PepsiCo is praised for its product variety and customer service, concerns about pricing and environmental sustainability persist.
Risk Analysis
In assessing the investment landscape for PepsiCo, Inc. (PEP), it’s crucial to understand the potential risks that could impact the company’s performance. Below is a table summarizing key risks:
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Volatility | Fluctuations in commodity prices affecting margins | High | High |
| Regulatory Changes | New health regulations impacting product offerings | Medium | High |
| Supply Chain Issues | Disruptions in logistics affecting product availability | High | Medium |
| Currency Fluctuations | Exchange rate changes impacting international sales | Medium | Medium |
| Consumer Preferences | Shifts towards healthier options affecting sales | High | High |
Synthesize the risks, emphasizing the most likely and most impactful: Market volatility and changing consumer preferences stand out as critical risks for PEP, particularly given recent trends towards healthier eating habits and rising commodity prices.
Should You Buy PepsiCo, Inc.?
PepsiCo, Inc. (PEP) boasts flagship products in the beverage and snack industries, maintaining a net profit margin of 10.43%, a return on invested capital (ROIC) of 4.47%, and a weighted average cost of capital (WACC) of 5.23%. Despite its strong brand recognition and diversified product portfolio, recent trends indicate a bearish market with seller volumes dominating.
Given the current metrics, PepsiCo’s net margin is above zero; however, its ROIC is below the WACC and the 5% threshold. The long-term trend is negative, reflecting a significant decline of 13.02% in price, and there is a prevailing seller volume. Thus, I recommend waiting for a bullish reversal and improvement in fundamentals before considering an investment in PepsiCo for long-term strategies.
Specific risks to consider include heightened competition in the beverage sector and potential supply chain disruptions that could affect profitability.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- ProVise Management Group LLC Increases Stock Position in PepsiCo, Inc. $PEP – MarketBeat (Nov 16, 2025)
- A Look Into PepsiCo Inc’s Price Over Earnings – PepsiCo (NASDAQ:PEP) – Benzinga (Nov 14, 2025)
- PepsiCo, Inc. $PEP Shares Sold by Massachusetts Financial Services Co. MA – MarketBeat (Nov 16, 2025)
- Coca-Cola Vs. PepsiCo: Which Beverage Giant is Poised for the Top Spot? – Yahoo Finance (Oct 27, 2025)
- PepsiCo, Inc. $PEP Position Raised by Empower Advisory Group LLC – MarketBeat (Nov 16, 2025)
For more information about PepsiCo, Inc., please visit the official website: pepsico.com
