Key Takeaways for PepsiCo Stock
- Revenue grew 6% year-over-year to $24.18 billion in the quarter ended mid-June, PepsiCo’s fastest pace in the reported data.
- Operating income grew a slower 4% year-over-year, reaching $4.10 billion as gross margin slipped to 54% from 55% a year earlier.
- TIKR’s mid-case model values PepsiCo stock at approximately $192, implying around 40% total return from the current price of $137.
PepsiCo Stock’s North American Turnaround Faces a Gas-Price Headwind
PepsiCo (PEP) reported almost 7% revenue growth for the first half of the year on its latest earnings call, adding fresh data to the debate around PepsiCo stock’s North American turnaround.
The company sells snack brands including Frito-Lay and beverage brands including Pepsi and Gatorade through its U.S. foods and beverages divisions, PepsiCo Foods North America (PFNA) and PepsiCo Beverages North America (PBNA).
Chief Executive Ramon Laguarta said global volume growth hit its fastest pace since 2022. “That’s the fastest growth in volume since 2022,” Laguarta told analysts on the Q2 earnings call.
PFNA volume stayed flat in the quarter even after PepsiCo widened its affordability pricing and product innovation push.
PBNA’s operating margin fell 90 basis points in the quarter, a decline CFO Stephen Schmitt tied partly to the commercial arrangement around energy drink brand Alani.
Convenience and gas station channel softness, linked by management to rising gasoline prices, also weighed on PBNA’s results.
International revenue kept accelerating, and international operating margin expanded by a full point during the quarter.
Schmitt said tariff refund claims tied to duties paid last year should add about 1 point of EPS growth for the full year.
Management reaffirmed full-year guidance, though Laguarta said results may land toward the low end of the EPS range.
He pointed to expanding shelf space, new products like Doritos Protein, and an accelerating Away From Home push as the named drivers meant to close the gap.
Wall Street’s Take on PepsiCo Stock’s Operating Leverage Holds as Gross Margin Slips
PepsiCo’s revenue reached $24.18 billion in the quarter that ended in mid-June. That marked 6% year-over-year growth, the strongest pace across the reported quarters.
Meanwhile, operating income grew more slowly, increasing 4% year-over-year. That pace of growth still delivered $4.10 billion of operating income for the quarter.
Gross margin compressed to 54%, down from 55% a year earlier while operating margin held at 17%, unchanged from the year-ago level.
Total operating expenses totaled $9.01 billion, enough to keep operating margin intact despite the gross margin pressure.
TIKR’s $192 Target on PepsiCo Stock Holds if Operating Leverage Keeps Absorbing Margin Pressure
TIKR’s model values PepsiCo at approximately $192 by late 2030, implying around 40% total return from the current price of $137, or roughly 8% per year.
That target depends on the operating leverage already visible in this quarter’s flat operating margin despite gross margin pressure.
If cost discipline keeps offsetting margin headwinds the way it did this quarter, revenue growth can keep translating into operating income growth without further margin erosion.
The target’s credibility hinges on tariff refund benefits and productivity gains keeping operating income growth in step with the revenue acceleration already underway.
Should You Invest in PepsiCo, Inc.?
The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.
Pull up PepsiCo, Inc. stock and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.
You can build a free watchlist to track PepsiCo, Inc. alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.
Access Professional Tools to Analyze PEP stock on TIKR for Free →
Looking for New Opportunities?
- See what stocks billionaire investors are buying so you can follow the smart money.
- Analyze stocks in as little as 5 minutes with TIKR’s all-in-one, easy-to-use platform.
- The more rocks you overturn… the more opportunities you’ll uncover. Search 100K+ global stocks, global top investor holdings, and more with TIKR.
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!
