Key Stats for Pepsi Stock
- Past-Week Performance: 6%
- 52-Week Range: $128 to $168
- Valuation Model Target Price: $192
- Implied Upside: 15% over 2.9 years
What Happened to PEP Stock?
PepsiCo (PEP) traded below its $168 52-week high and rose 6% over the past week, after several product and policy items.
Reuters reported U.S. Health Secretary Robert F. Kennedy Jr. urged food makers to cut artificial dyes, with voluntary federal compliance and rising state bills.
PepsiCo has not set a deadline to remove dyes, but it introduced dye-free Doritos and Cheetos Simply NKD alongside existing products.
PepsiCo’s ingredients R&D lead said natural dye supply constraints limit reformulation, and sourcing a stable blue hue remains particularly difficult.
The company plans to launch low-sugar Gatorade colored with vegetables this spring while keeping the original dyed versions on shelves.
In India, Reuters noted mass-market bottled water is mainly produced by PepsiCo and Coca-Cola, while premium mineral water expands from 1% to 8%.
Pepsi also unveiled a Super Bowl LX ad, “The Choice,” to promote Pepsi Zero Sugar and cited 30.8% growth for the brand in 2025.
The provided reports did not include an earnings release, guidance update, or capital allocation change, so the company’s outlook and strategy remained unchanged.
Is Pepsi Stock Fairly Valued Right Now?
Under the valuation model shown, the stock is modeled using:
- Revenue Growth: 3.8%
- Operating Margins: 16.8%
- Exit P/E Multiple: 17.3x
PEP stock operating model reflects a mature, scaled consumer staples business, with revenue projected to grow at roughly a 3.8% CAGR through the end of 2028.
That growth path represents normalization from earlier, stronger expansion, consistent with a company operating at global scale across beverages and snacks rather than entering a new growth phase.
Profitability is already established, with operating margins modeled near 16.8%, broadly in line with PepsiCo’s historical margin profile and incremental efficiency gains.
EBITDA and EBIT growth in the forecast track revenue expansion and modest operating leverage, indicating earnings growth driven by scale discipline rather than cost restructuring.
Free cash flow remains positive and expands steadily across the forecast, with margins improving toward low-double-digit levels, reinforcing the durability of cash generation.
The model assumes continued normalization rather than acceleration, with occasional earnings variability that does not disrupt the long-term margin or cash flow trajectory.
Valuation relies on execution continuity rather than multiple expansion, as the exit P/E of roughly 17x aligns with PepsiCo’s recent trading range.
Based on these inputs, PEP stock appears fairly valued at current levels, with the share price reflecting steady execution, moderate growth, and stable cash generation over the modeled timeframe.
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