What’s Happening With PepsiCo Stock?

May 28th, 2025 by Trefis Team
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PEP: PepsiCo logo
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PepsiCo

PepsiCo (NASDAQ: PEP) stock has fallen 12% this year, underperforming the broader S&P 500 index, which is up 1%. This decline can be attributed to weak consumer sentiment and spending, further impacted by the company’s mixed Q1 performance, where revenue slightly beat estimates but earnings narrowly missed.

Despite these headwinds, PEP stock, currently around $130, appears attractive at its current valuation. While we acknowledge some concerns, we believe the stock’s low valuation makes it a compelling pick. This conclusion is based on a comparison of PepsiCo’s current valuation against its recent operating performance and its historical and current financial health.

Our analysis of PepsiCo across key parameters—Growth, Profitability, Financial Stability, and Downturn Resilience—indicates that the company currently exhibits a weak operating performance and financial condition. We will delve into these details further below. Now, of course, individual stocks are more volatile than a portfolio – and in this environment if you seek upside with less volatility than a single stock, consider the High Quality portfolio, which has outperformed the S&P 500 and achieved returns greater than 91% since inception.

How Does PepsiCo’s Valuation Look vs. The S&P 500?

Going by what you pay per dollar of sales or profit, PEP stock looks undervalued compared to the broader market.

  • PepsiCo has a price-to-sales (P/S) ratio of 2.0 vs. a figure of 3.0 for the S&P 500
  • Additionally, the company’s price-to-free cash flow (P/FCF) ratio is 14.2 compared to 20.5 for S&P 500
  • And, it has a price-to-earnings (P/E) ratio of 19.1 vs. the benchmark’s 26.4

How Have PepsiCo’s Revenues Grown Over Recent Years?

PepsiCo’s Revenues have grown marginally over recent years.

  • PepsiCo has seen its top line grow at an average rate of 4.3% over the last 3 years (vs. increase of 5.5% for S&P 500)
  • Its revenues have declined 0.4% from $92 Bil to $92 Bil in the last 12 months (vs. growth of 5.5% for S&P 500)
  • Also, its quarterly revenues decreased 1.8% to $18 Bil in the most recent quarter from $18 Bil a year ago (vs. 4.8% improvement for S&P 500)

How Profitable Is PepsiCo?

PepsiCo’s profit margins are moderate and comparable to the benchmark index.

Does PepsiCo Look Financially Stable?

PepsiCo’s balance sheet looks fine.

  • PepsiCo’s Debt figure was $49 Bil at the end of the most recent quarter, while its market capitalization is $180 Bil (as of 5/27/2025). This implies a moderate Debt-to-Equity Ratio of 27.2% (vs. 19.9% for S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
  • Cash (including cash equivalents) makes up $8.6 Bil of the $102 Bil in Total Assets for PepsiCo.  This yields a moderate Cash-to-Assets Ratio of 8.4% (vs. 13.8% for S&P 500)

How Resilient Is PEP Stock During A Downturn?

PEP stock has seen an impact that was better than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on PEP stock? Our dashboard How Low Can PepsiCo Stock Go In A Market Crash? has a detailed analysis of how the stock performed during and after previous market crashes.

Inflation Shock (2022)

  • PEP stock fell 19.4% from a high of $196.12 on 12 May 2023 to $158.08 on 12 October 2023, vs. a peak-to-trough decline of 25.4% for the S&P 500
  • The stock is yet to recover to its pre-Crisis high
  • The highest the stock has reached since then is $183.11 on 16 May 2024 and currently trades at around $130

COVID-19 Pandemic (2020)

  • PEP stock fell 29.3% from a high of $146.99 on 14 February 2020 to $103.93 on 20 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
  • The stock fully recovered to its pre-Crisis peak by 29 December 2020

Global Financial Crisis (2008)

  • PEP stock fell 42.4% from a high of $79.57 on 10 January 2008 to $45.81 on 9 March 2009, vs. a peak-to-trough decline of 56.8% for the S&P 500
  • The stock fully recovered to its pre-Crisis peak by 2 April 2013

Putting All The Pieces Together: What It Means For PEP Stock

In summary, PepsiCo’s performance across the parameters detailed above are as follows:

  • Growth: Neutral
  • Profitability: Neutral
  • Financial Stability: Neutral
  • Downturn Resilience: Very Strong
  • Overall: Neutral

PepsiCo stock has shown moderate performance across the aforementioned parameters, which is reflected in its current low valuation. It’s worth highlighting that PEP stock typically performs well relative to the broader market during downturns, which is a significant positive for the stock. Overall, we believe PepsiCo’s current low valuation makes it an attractive investment. In fact, we estimate PepsiCo’s valuation to be $161, representing over 20% upside from its current levels.

While it looks like there is some upside to PEP stock, the Trefis Reinforced Value (RV) Portfolio, has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.

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