Should You Buy PepsiCo Stock At $145?

July 18th, 2025 by Trefis Team
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PEP: PepsiCo logo
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PepsiCo

PepsiCo’s stock surged 7% on July 17 following a strong Q2 earnings report. The company not only exceeded expectations but also reaffirmed its full-year outlook and outlined strategies to revitalize its North America business, which had been under pressure due to various factors, including evolving consumer demand and the Quaker Oats recall.

Earlier this month, we highlighted PepsiCo as a more appealing investment than Coca-Cola, citing its lower valuation and the likelihood of a turnaround in its North America operations in the upcoming quarters. Given the recent positive results and subsequent stock rise, the crucial question now is: Is PepsiCo still a buy at $145 per share?

We believe it remains a solid investment, even after its recent rise. This conclusion stems from a comprehensive analysis comparing PepsiCo’s current valuation to its operational performance in recent years and its historical and current financial health. Our assessment of PepsiCo across key metrics—Growth, Profitability, Financial Stability, and Downturn Resilience—indicates the company maintains strong operational performance and financial condition, with its valuation still appearing attractive. That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative — having outperformed the S&P 500 and generated returns exceeding 91% since its inception. Separately, see – RCAT Stock To $25?

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

Going by what you pay per dollar of sales or profit, PEP stock is currently valued in line with the broader market.

  • PepsiCo has a price-to-sales (P/S) ratio of 2.0 vs. a figure of 3.1 for the S&P 500
  • Additionally, the company’s price-to-free cash flow (P/FCF) ratio is 25.3 compared to 20.9 for S&P 500
  • And, it has a price-to-earnings (P/E) ratio of 26.4 vs. the benchmark’s 26.9

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 0.3% to $92 Bil in the last 12 months (vs. growth of 5.5% for S&P 500)
  • Also, its quarterly revenues grew 1% to $22.7 Bil in the most recent quarter from $22.5 Bil a year ago (vs. 4.8% improvement for S&P 500)

How Profitable Is PepsiCo?

Although moderate, PepsiCo’s profit margins are lower than most companies in the Trefis coverage universe.

Does PepsiCo Look Financially Stable?

PepsiCo’s balance sheet looks fine.

  • PepsiCo’s Debt figure was $51 Bil at the end of the most recent quarter, while its market capitalization is $200 Bil (as of 7/17/2025). This implies a moderate Debt-to-Equity Ratio of 25.8% (vs. 19.4% for S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
  • Cash (including cash equivalents) makes up $8 Bil of the $105 Bil in Total Assets for PepsiCo.  This yields a moderate Cash-to-Assets Ratio of 7.6%

How Resilient Is PEP Stock During A Downturn?

PEP stock has seen an impact that was much 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 $145

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: Good

Overall, PepsiCo demonstrates a good performance across these key metrics. However, this strength isn’t fully reflected in the stock’s current valuation, which appears low, thus making it an attractive investment opportunity.

Even after its recent increase to $145, PepsiCo stock is trading at 18 times its trailing adjusted earnings of $7.87. This is notably lower than its average price-to-earnings (P/E) ratio of 22 times over the past four years.

While it’s possible investors are assigning a lower multiple due to factors like thinner margins and past sales challenges in North America, we believe PepsiCo stock still offers a compelling entry point for investors with a 3-5 year investment horizon.

While PEP stock may offer more room for growth, you could explore the Trefis Reinforced Value (RV) Portfolio, which 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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