PepsiCo Trades Near 52-Week Low: Should You Buy, Hold or Sell?
Currently trading at $135.38, the stock rebounded 6.1% from its 52-week low. However, it still reflects a significant 25.2% discount from its 52-week high of $180.91.
Notably, the PepsiCo stock has declined 11% year to date, underperforming the broader industry 's 8.7% growth and the Consumer Staples sector's 7% rise. In contrast, the S&P 500 has rallied 6.2% in the same period.
PEP's performance is notably weaker than that of its competitors, The Coca-Cola Company KO and Monster Beverage MNST, which have gained 14.6% and 20%, respectively, in the year-to-date period. The stock has underperformed Primo Brands Corporation PRMB, which has declined 2.7% in the same period.
PEP's YTD Stock Return
PepsiCo is trading below its 50 and 200-day moving averages, indicating a bearish outlook and challenges in sustaining the recent performance levels.
PepsiCo's Stock Trades Below 50 & 200-Day Moving Averages
Challenges Faced by PEP
PepsiCo's recent performance reflects deepening investor concerns about the persistent revenue softness and a sluggish start to 2025. The company reported 1.2% organic revenue growth in first-quarter fiscal 2025, 2% adjusted for international calendar shifts, highlighting weak consumer demand, particularly in North America. Price-sensitive shoppers, still feeling the pinch of inflation, are pulling back on discretionary spending, directly impacting PepsiCo's key snack brands like Frito-Lay.
Segment-level performance was uneven, exposing internal imbalances. PepsiCo Foods North America (PFNA) posted a 2% year-over-year organic revenue decline and a 7% drop in core operating profit, driven by fixed-cost deleverage and heavy investments. While Quaker Foods saw a modest rebound post-recall, it failed to counter softness at Frito-Lay.
On the positive side, Beverages North America delivered improved sales and margins, and international operations grew, albeit at a slower pace. Still, the uneven contributions raise red flags about PepsiCo's ability to drive broad-based, consistent growth, especially as North America remains under strain.
Margins also came under pressure. While the gross margin improved slightly, the core operating margin declined as productivity initiatives, like automation and supply-chain efficiencies, have yet to deliver meaningful savings. Input cost inflation, tariff exposure and global supply-chain uncertainties continue to weigh on profitability, particularly in mature markets with weak pricing power.
In response to these headwinds, PepsiCo lowered its fiscal 2025 outlook, now guiding for flat core EPS growth (in constant currency), down from a previously expected mid-single-digit increase. Organic revenue growth is also forecast in the low-single-digit range. With limited pricing flexibility and little near-term operating leverage, the company's growth prospects remain challenged. Unless PepsiCo can accelerate cost reductions or reignite brand momentum, the stock may remain under pressure.
PepsiCo's Estimate Revision Trend
The Zacks Consensus Estimate for PEP's 2025 EPS was unchanged in the last 30 days, while the estimate for 2026 EPS has declined 0.2% in the same period. The downward revision in earnings estimates indicates that analysts have been losing faith in the company's growth potential.
The Zacks Consensus Estimate for PEP's 2025 sales suggests year-over-year growth of 0.5% and that for EPS indicates a decline of 3.6%. For 2026, the Zacks Consensus Estimate for PepsiCo's sales and EPS implies 3.2% and 5.3% year-over-year growth, respectively. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
PEP's Discounted Valuation
PepsiCo is currently trading at a forward 12-month P/E multiple of 16.75X, exceeding the industry average of 18.66X and the S&P 500's average of 22.75X.
At 16.75X P/E, PEP, which is a leading name in the Beverages – Soft Drinks industry, is trading at a valuation much lower than its competitors. Its competitors, such as Coca-Cola, Monster Beverage and Primo Brands, are delivering solid growth and trade at higher multiples. Coca-Cola, Monster Beverage and Primo Brands have forward 12-month P/E ratios of 23.08X, 32X and 18.05X — all significantly higher than PepsiCo.
Although PEP's stock valuation is currently lower than that of its industry peers, this gap may not be as advantageous as it appears to be. The lower price can signal underlying issues rather than presenting a straightforward investment opportunity.
How Should You Play the PepsiCo Stock?
PEP is clearly in a tough spot, facing persistent headwinds with no clear near-term catalysts. The company finds itself in a difficult phase, weighed down by persistent operational headwinds, a muted earnings outlook and negative estimate revisions. The stock's recent decline, hitting a fresh 52-week low, reflects eroding investor confidence and limited near-term momentum. While valuation multiples have dipped below its peers, the discount seems to reflect PepsiCo's weakening fundamentals rather than a compelling buying opportunity. Mixed segment performance and a reset in growth expectations suggest that the underperformance is more structural than temporary.
Until PepsiCo delivers tangible progress on execution, margin recovery and consistent top-line improvement, the valuation gap is unlikely to close. With no immediate catalysts in sight, the cautious guidance and estimate downgrades reinforce the case for a defensive stance. For now, investors may be better served by staying on the sidelines and awaiting clearer signs of stabilization before reconsidering exposure to this Zacks Rank #4 (Sell) stock.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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CocaCola Company (The) (KO): Free Stock Analysis Report
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