Key Stats for PepsiCo Stock
- Price change for PepsiCo stock in the last 6 months: -20%
- $PEP Stock Price as of Oct. 7: $124
- 52-Week High: $172
- $PEP Stock Price Target: $149
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What Happened?
PepsiCo (PEP) is under pressure ahead of its quarterly earnings report on Thursday. Weight-loss drugs and sticky inflation are both hurting demand. That has put PepsiCo stock in a tough spot.
Reuters reports that PepsiCo is running out of time to hit the targets it set after activist investor Elliott took a roughly $4 billion stake a year ago.
The company wants to lift its core operating margin by 100 basis points over three years. Instead, the margin fell 15 basis points in the first half to 16.3% of revenue.
North America is the main problem. Volumes have shrunk as higher input costs from the Iran war and inflation hold back shoppers.
A price cut of up to 15% on Lay’s and Doritos in February has not fixed it. TD Cowen’s Robert Moskow said sales are flattish and PepsiCo is losing market share.
Weight-loss drugs add to the worry. PepsiCo has launched Doritos Protein, SunChips Fiber and Good Warrior beef sticks in response.
Last month it also raised some chip and soda prices.
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What the Market Is Telling Us About PepsiCo Stock
PepsiCo stock is down nearly 13% this year. It is down about 16% since Elliott invested.
The market is also paying less for the company. Its enterprise value is now 10 times EBITDA, down from 18 times in mid-2022. Rival Coca-Cola has pulled ahead.
Analysts expect Q3 revenue to rise 4.3% to $24.96 billion. Adjusted earnings per share are expected to be about $2.29, up just 0.21%.
The July call offered some hope. Management said international sales grew 7%. It also said volumes were up in the first half, with foods up 3% and beverages up 2%.
That was the fastest volume growth since 2022.
But North America was softer than expected. The CEO blamed higher gas prices and weak convenience-store sales.
Management said full-year earnings could land at the low end of its range.
Investors want two things, according to one fund manager quoted by Reuters. They want drink pricing power that keeps pace with Coke. They also want proof that snack volumes have stopped sliding.
Thursday’s report is a key test for PepsiCo stock.
Any sign of a North America rebound could help. More weak volumes would keep the pressure on PepsiCo stock.
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So what is PepsiCo stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
