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PEP Stock Analysis: Hold (Score 57.6/100) | Blank Capital Research | Blank Capital Research
PEP
PEPSICO INC
$157.23
-0.26 (-0.17%)
Score57.6
Data as of Apr 6, 2026
PEP
PEPSICO INC
Consumer StaplesCandy & Soda
$157.23
-0.26 (-0.17%)
Open $157.16High $157.79Low $156.33Prev $157.49Vol ---52W: $127.60 – $171.48
Hold
Composite score
01234567890123456789.0123456789
Global rank
#416
Percentile
Top 9%
Business quality
83rd
percentile
Exceptional capital efficiency and structural profitability. This enterprise generates superior returns on invested capital compared to industry peers.
Relative to Consumer Staples Sector Median (N=180)
Metric
PEP
Benchmark
P/E Ratio
25.5x
-23%
EV/EBITDA
16.4x
+136%
Price / Book
11.7x
Implied Value Audit
OVERVALUED
Implied Fair Value (vs Sector)
-73.9%
$41.00Spot: $157.23
Spot
Implied
-50% Delta+50% Delta
Relative valuation derived from Consumer Staples sector median benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Multiples adjusted for extreme outliers and non-recurring volatility.
Auditing capital efficiency...
Quality Profile Audit
Score: 83GRADE A
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation.
Return on Equity
Profit generated per dollar of shareholder equity
46.0%
Sector: 7.7%
Dividend Analysis audit
INCOME
3.79%
Trailing Yield
$3.79
Per $100 Invested
Solid dividend yield for income-focused strategies.
Est. Payout Ratio
97%HIGH
Analyst Projections
Analyst Consensus
Unlock Valuation Tools
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Based on our 6-factor quantitative model, PEPSICO INC (PEP) receives a "Hold" rating with a composite score of 57.6/100, ranked #416 out of 4446 stocks. Key factor scores: Quality 83/100, Value 42/100, Momentum 51/100. This is quantitative analysis only — not investment advice.
PEPSICO INC (PEP) Stock Analysis — April 2026 Rating, Price, and Forecast
Company Overview — What Does PEPSICO INC Do?
PepsiCo, Inc. manufactures, markets, distributes, and sells various beverages and convenient foods worldwide. The company operates through seven segments: Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; Africa, Middle East and South Asia; and Asia Pacific, Australia and New Zealand and China Region. It provides dips, cheese-flavored snacks, and spreads, as well as corn, potato, and tortilla chips; cereals, rice, pasta, mixes and syrups, granola bars, grits, oatmeal, rice cakes, simply granola, and side dishes; beverage concentrates, fountain syrups, and finished goods; ready-to-drink tea, coffee, and juices; dairy products; and sparkling water makers and related products. It serves wholesale and other distributors, foodservice customers, grocery stores, drug stores, convenience stores, discount/dollar stores, mass merchandisers, membership stores, hard discounters, e-commerce retailers and authorized independent bottlers, and others through a network of direct-store-delivery, customer warehouse, and distributor networks, as well as directly to consumers through e-commerce platforms and retailers. The company was founded in 1898 and is headquartered in Purchase, New York. PEPSICO INC (PEP) is classified as a mega-cap stock in the Consumer Staples sector, specifically within the Candy & Soda industry. The company is led by CEO Ramon L. Laguarta and employs approximately 315,000 people, headquartered in Harrison, New York. With a market capitalization of $211.4B, PEP is one of the largest companies in the Consumer Staples sector.
PEPSICO INC (PEP) Stock Rating — Hold (April 2026)
As of April 2026, PEPSICO INC receives a Hold rating with a composite score of 57.6/100 and 3 out of 5 stars from the Blank Capital Research quantitative model.PEP ranks #416 out of 4,446 stocks in our coverage universe. Within the Consumer Staples sector, PEPSICO INC ranks #13 of 180 stocks, placing it in the top 10% of its Consumer Staples peers. The rating is generated by a multi-factor model that weighs quality (30%), momentum (25%), value (15%), investment (10%), stability (10%), and short interest (10%).
PEP Stock Price and 52-Week Range
PEPSICO INC (PEP) currently trades at $157.23. The stock lost $0.26 (0.2%) in the most recent trading session. The 52-week high for PEP is $171.48, which means the stock is currently trading -8.3% from its annual peak. The 52-week low is $127.60, putting the stock 23.2% above its annual trough. Recent trading volume was 4.4M shares, reflecting moderate market activity.
Is PEP Overvalued or Undervalued? — Valuation Analysis
PEPSICO INC (PEP) carries a value factor score of 42/100 in the Blank Capital model, indicating fair valuation relative to historical norms. The trailing price-to-earnings ratio is 25.51x, compared to the Consumer Staples sector average of 33.11x — a discount of 23%. The price-to-book ratio stands at 11.73x, versus the sector average of 1.74x. The price-to-sales ratio is 2.25x, compared to 0.35x for the average Consumer Staples stock. On an enterprise value basis, PEP trades at 16.35x EV/EBITDA, versus 6.93x for the sector.
Overall, PEP's valuation appears roughly in line with sector benchmarks, suggesting the market is pricing the stock fairly given its current fundamentals and growth trajectory. Neither deep value nor significantly overpriced, the stock occupies a middle ground on valuation.
PEPSICO INC Profitability — ROE, Margins, and Quality Score
PEPSICO INC (PEP) earns a quality factor score of 83/100, reflecting elite profitability and capital efficiency that places it among the highest-quality businesses in the market. The return on equity (ROE) is 46.0%, compared to the Consumer Staples sector average of 7.7%, which demonstrates strong shareholder value creation. Return on assets (ROA) comes in at 8.3% versus the sector average of 3.1%.
On a margin basis, PEPSICO INC reports gross margins of 54.3%, compared to 26.2% for the sector. The operating margin is 12.3% (sector: 2.9%). Net profit margin stands at 8.9%, versus 1.6% for the average Consumer Staples stock. Revenue growth is running at 25.8% on a trailing basis, compared to 3.1% for the sector. These metrics collectively paint a picture of a highly profitable business with durable competitive advantages.
PEP Debt, Balance Sheet, and Financial Health
PEPSICO INC has a debt-to-equity ratio of 246.0%, compared to the Consumer Staples sector average of 72.0%. This elevated leverage warrants close monitoring, as it increases the company's sensitivity to rising interest rates and economic downturns. Total debt on the balance sheet is $44.31B. Cash and equivalents stand at $8.51B.
PEP has a beta of 0.17, meaning it is less volatile than the S&P 500, making it a relatively defensive holding. The stability factor score for PEPSICO INC is 93/100, indicating low-volatility characteristics and consistent price behavior that appeals to risk-averse investors.
PEPSICO INC Revenue and Earnings History — Quarterly Trend
In TTM 2026, PEPSICO INC reported revenue of $93.92B and earnings per share (EPS) of $6.97. Net income for the quarter was $8.29B. Gross margin was 54.3%. Operating income came in at $7.94B.
In FY 2024, PEPSICO INC reported revenue of N/A and earnings per share (EPS) of $6.97. Operating income came in at $12.89B.
In Q4 2025, PEPSICO INC reported revenue of $29.34B. Net income for the quarter was $2.56B. Gross margin was 53.2%.
In FY 2025, PEPSICO INC reported revenue of $93.92B and earnings per share (EPS) of $6.02. Net income for the quarter was $8.29B. Gross margin was 54.1%. Operating income came in at $11.50B.
Over the past 8 quarters, PEPSICO INC has demonstrated a growth trajectory, with revenue expanding from $40.65B to $93.92B. Investors analyzing PEP stock should weigh these quarterly trends alongside the valuation and quality metrics discussed above.
PEP Dividend Yield and Income Analysis
PEPSICO INC (PEP) currently pays a dividend yield of 3.8%. At this yield, a $10,000 investment in PEP stock would generate approximately $$379.00 in annual dividend income. This compares to the Consumer Staples sector average dividend yield of 0.4%, meaning PEP offers above-average income for its sector. The net margin of 8.9% provides reasonable coverage for the dividend, though investors should monitor payout sustainability.
PEP Momentum and Technical Analysis Profile
PEPSICO INC (PEP) has a momentum factor score of 51/100, reflecting neutral trend characteristics. The stock is neither significantly outperforming nor underperforming the broader market on a momentum basis. The investment factor score is 25/100, which measures capital allocation efficiency and asset growth patterns. The short interest score of 18/100 signals elevated short interest, which can indicate bearish sentiment among institutional investors.
PEP vs Competitors — Consumer Staples Sector Ranking and Peer Comparison
Comparing PEP against the S&P 500 benchmark is also instructive for understanding relative performance. Investors can view the full PEP vs S&P 500 (SPY) comparison to assess how PEPSICO INC stacks up against the broader market across all factor dimensions.
PEP Next Earnings Date
PEPSICO INC (PEP) is scheduled to report earnings on April 16, 2026 for Q1 2026. Analysts estimate EPS of $1.55. Revenue is estimated at $18.94B.Investors can track all upcoming reports on the earnings calendar.
Should You Buy PEP? — Investment Thesis Summary
PEPSICO INC presents a balanced picture with arguments on both sides. The quality score of 83/100 indicates above-average profitability and business fundamentals. Low volatility (stability score 93/100) reduces downside risk.
In summary, PEPSICO INC (PEP) earns a Hold rating with a composite score of 57.6/100 as of April 2026. The rating is derived from the Blank Capital Research methodology, which combines six factor dimensions into a single quantitative ranking. Investors should consider these quantitative signals alongside their own fundamental research, risk tolerance, and investment time horizon before making buy or sell decisions on PEP stock.
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Institutional Research Dossier
PEPSICO INC (PEP) Deep Dive Analysis
Published on March 24, 2026
Action RatingHold
Sections
Executive Summary
PepsiCo's 'Hold' rating (3-star) is justified by its robust profitability and stability, offset by a relatively rich valuation and concerns about capital allocation. While the company boasts impressive brand recognition and distribution networks, its current price reflects these strengths, leaving limited upside potential for investors seeking substantial returns. The key takeaway is that PepsiCo remains a reliable, albeit not undervalued, investment in the consumer staples sector.
The company's strong quality score (83/100) and stability score (93/100) highlight its consistent performance and resilience, making it a defensive play in uncertain economic times. However, the lower value score (43/100) and investment score (25/100) suggest that the market has already priced in much of PepsiCo's future growth and efficiency improvements, and that the company's capital allocation strategies may not be optimal. Therefore, while PepsiCo is unlikely to experience significant downside, its potential for outperformance is limited, supporting the 'Hold' recommendation.
Business Strategy & Overview
PepsiCo operates as a global manufacturer, marketer, and distributor of a vast portfolio of beverages and convenient foods. Its revenue streams are diversified across seven key segments: Frito-Lay North America, Quaker Foods North America, PepsiCo Beverages North America, Latin America, Europe, Africa, Middle East and South Asia, and Asia Pacific, Australia and New Zealand and China Region. This diversification mitigates risk by reducing reliance on any single geographic market or product category. The company's strategic focus is on maintaining and expanding its market share through product innovation, strategic acquisitions, and effective marketing campaigns.
PepsiCo's product pipeline is continuously refreshed with new flavors, healthier options, and innovative packaging to cater to evolving consumer preferences. The company invests heavily in research and development to stay ahead of trends and maintain a competitive edge. Furthermore, PepsiCo leverages its extensive distribution network, which includes direct-store-delivery, customer warehouse, and distributor networks, to ensure its products are readily available to consumers across various retail channels, including grocery stores, convenience stores, and e-commerce platforms.
The company's business model relies on strong brand recognition and consumer loyalty. Brands like Pepsi, Lay's, Gatorade, and Quaker are household names, providing a significant advantage in the competitive consumer staples market. PepsiCo also focuses on building strong relationships with retailers and foodservice providers to secure shelf space and distribution agreements. This multifaceted approach allows PepsiCo to maintain a dominant position in the industry and generate consistent revenue streams.
In the context of the broader industry, PepsiCo competes with other major players such as Coca-Cola, Nestle, and Mondelez International. The company differentiates itself through its diverse product portfolio, which includes both beverages and snacks, providing a more comprehensive offering to consumers. PepsiCo also emphasizes sustainability and social responsibility, aligning its business practices with evolving consumer values. This commitment to sustainability not only enhances its brand image but also reduces operational costs through improved resource efficiency.
Execution Benchmarks audit
Revenue Growth
YOY expansion rate
25.8%
Sector: 3.1%
+721% VS SCTR
Economic Moat Analysis
PepsiCo possesses a Wide economic moat, primarily driven by its brand intangible assets and extensive distribution network. The company's portfolio of iconic brands, such as Pepsi, Lay's, and Gatorade, commands significant consumer loyalty and pricing power. These brands have been built over decades through consistent marketing investments and product innovation, creating a strong emotional connection with consumers. This brand equity allows PepsiCo to charge premium prices and maintain market share even in the face of competition.
The company's distribution network is another key source of its competitive advantage. PepsiCo has invested heavily in building a vast and efficient distribution system that reaches a wide range of retail channels, from large supermarkets to small convenience stores. This network provides a significant barrier to entry for smaller competitors who lack the scale and resources to replicate it. The direct-store-delivery (DSD) system allows PepsiCo to maintain control over product placement and freshness, further enhancing its competitive position.
While PepsiCo's products are not necessarily unique or technologically advanced, the combination of strong brands and an efficient distribution network creates a powerful competitive advantage. Consumers are willing to pay a premium for familiar and trusted brands, and PepsiCo's distribution network ensures that its products are readily available whenever and wherever consumers want them. This combination of factors makes it difficult for competitors to dislodge PepsiCo from its dominant position in the market.
However, the moat is not impenetrable. Shifting consumer preferences towards healthier alternatives and increased competition from private label brands pose potential threats. PepsiCo must continue to innovate and adapt to changing consumer tastes to maintain its brand relevance and pricing power. Additionally, the rise of e-commerce and direct-to-consumer channels could disrupt traditional distribution models, requiring PepsiCo to invest in new capabilities and partnerships.
Despite these challenges, PepsiCo's wide moat is likely to persist for the foreseeable future. The company's strong brands and distribution network provide a significant competitive advantage that is difficult to replicate. Furthermore, PepsiCo's commitment to innovation and sustainability positions it well to adapt to changing consumer preferences and maintain its market leadership. The company's ability to leverage its scale and resources to invest in new growth opportunities further strengthens its moat.
Financial Health & Profitability
PepsiCo demonstrates strong financial health, characterized by consistent revenue growth, high margins, and robust cash flow generation. The company's TTM revenue of $93.92 billion and revenue growth of 25.8% significantly outperform the consumer staples sector average of 4.3%. This indicates PepsiCo's ability to effectively capture market share and drive sales growth across its diverse product portfolio. However, it is important to note that the 25.8% revenue growth figure may be an anomaly due to post-pandemic recovery and pricing actions, and future growth rates may moderate.
PepsiCo's profitability metrics are also impressive. The company's gross margin of 54.3%, operating margin of 12.3%, and net margin of 8.9% are substantially higher than the sector averages of 26.0%, 3.1%, and 1.7%, respectively. This highlights PepsiCo's efficient cost management and strong pricing power. The company's high return on equity (ROE) of 46.0% further underscores its ability to generate profits from shareholders' equity, significantly exceeding the sector average of 7.8%.
However, PepsiCo's balance sheet reveals a relatively high level of debt. The company's total debt of $44.31 billion and debt-to-equity ratio of 246.00 are higher than the sector averages. While PepsiCo's strong cash flow generation provides some comfort, the high debt level could constrain its ability to invest in future growth opportunities or return capital to shareholders. The free cash flow (FCF) of $2.38 billion is adequate but could be higher given the company's size and profitability. The Q4 FY2025 FCF of $-3.91B is concerning and warrants further investigation into the drivers of this negative cash flow.
Analyzing the quarterly financial history reveals some trends. Revenue has generally been increasing, but net income and EPS have fluctuated. The gross margin has remained relatively stable, hovering around 54-55%. The operating margin has shown some variability, ranging from 7.9% to 16.6%. These fluctuations could be due to various factors, such as changes in input costs, marketing expenses, or product mix. The negative FCF in Q2YTD FY2025 and Q4 FY2025 is a potential red flag and requires further scrutiny to determine if it is a temporary issue or a sign of underlying problems.
Overall, PepsiCo's financial health is strong, but the high debt level and fluctuating FCF warrant close monitoring. The company's impressive revenue growth, high margins, and strong ROE are positive indicators, but the balance sheet leverage could limit its financial flexibility. Investors should carefully assess PepsiCo's ability to manage its debt and generate consistent cash flow in the future.
Valuation Assessment
PepsiCo's valuation presents a mixed picture. The company's P/E ratio of 21.5x is lower than the consumer staples sector average of 34.2x, suggesting that it may be relatively undervalued compared to its peers. However, the EV/EBITDA ratio of 15.9x is significantly higher than the sector average of 7.3x, indicating that the company may be overvalued when considering its enterprise value relative to its earnings before interest, taxes, depreciation, and amortization.
The discrepancy between the P/E and EV/EBITDA ratios could be due to PepsiCo's high debt levels. The EV/EBITDA ratio takes into account the company's debt, while the P/E ratio does not. Therefore, the higher EV/EBITDA ratio may reflect the market's concern about PepsiCo's high debt burden. Additionally, the company's free cash flow yield, calculated as FCF divided by market capitalization, is relatively low, suggesting that the stock may be expensive relative to its cash flow generation.
Compared to its historical valuation, PepsiCo's current P/E ratio is slightly above its historical average, indicating that the stock is not particularly cheap. The company's historical EV/EBITDA ratio has also been lower than its current level, further suggesting that the stock may be overvalued. However, it is important to consider that PepsiCo's growth prospects may have improved in recent years, justifying a higher valuation.
Considering PepsiCo's growth rate, the stock appears to be fairly valued. The company's revenue growth of 25.8% is significantly higher than the sector average, indicating that it is growing at a faster pace than its peers. However, as mentioned earlier, this growth rate may not be sustainable in the long term. If PepsiCo's growth rate slows down, its valuation may become less attractive.
Overall, PepsiCo's valuation is not particularly compelling. While the company's P/E ratio is lower than the sector average, its EV/EBITDA ratio is high, and its free cash flow yield is low. The stock appears to be fairly valued relative to its growth rate, but the sustainability of that growth rate is uncertain. Therefore, investors should exercise caution when considering an investment in PepsiCo at its current valuation.
Risk & Uncertainty
PepsiCo faces several specific risks that could impact its future performance. One significant risk is changing consumer preferences. As consumers become more health-conscious, demand for sugary drinks and processed snacks may decline. PepsiCo needs to continue innovating and diversifying its product portfolio to cater to these evolving tastes. Failure to adapt could lead to a decline in sales and market share.
Another risk is intense competition. The consumer staples industry is highly competitive, with major players such as Coca-Cola, Nestle, and Mondelez International vying for market share. Increased competition could lead to price wars and reduced profitability. PepsiCo needs to maintain its brand strength and distribution network to effectively compete in this challenging environment.
Regulatory risks also pose a threat. Governments around the world are increasingly scrutinizing the food and beverage industry, imposing taxes on sugary drinks and implementing stricter labeling requirements. These regulations could increase PepsiCo's costs and reduce demand for its products. The company needs to proactively engage with regulators and adapt its business practices to comply with these evolving regulations.
Commodity price volatility is another concern. PepsiCo's input costs, such as sugar, corn, and packaging materials, are subject to price fluctuations. Unexpected increases in commodity prices could squeeze the company's margins and reduce its profitability. PepsiCo needs to effectively manage its supply chain and hedge against commodity price volatility to mitigate this risk.
Finally, currency exchange rate fluctuations could impact PepsiCo's financial results. As a global company, PepsiCo generates a significant portion of its revenue from international markets. Changes in exchange rates could reduce the value of these revenues when translated back into U.S. dollars. The company needs to carefully manage its currency exposure to minimize the impact of exchange rate fluctuations.
Bulls Say / Bears Say
The Bull Case
BULL VIEWPepsiCo's diverse product portfolio and global reach provide a stable revenue stream and mitigate risk, making it a reliable investment in any economic climate.
BULL VIEWThe company's strong brand recognition and efficient distribution network create a wide economic moat, allowing it to maintain pricing power and market share.
BULL VIEWPepsiCo's commitment to innovation and sustainability positions it well to adapt to changing consumer preferences and maintain its competitive edge.
The Bear Case
BEAR VIEWPepsiCo's high debt levels and relatively low free cash flow generation limit its financial flexibility and potential for future growth.
BEAR VIEWShifting consumer preferences towards healthier alternatives and increased competition from private label brands pose a significant threat to PepsiCo's market share and profitability.
BEAR VIEWThe company's valuation is already rich, leaving limited upside potential for investors seeking substantial returns.
About the Author
Marques Blank
Founder & Chief Investment Officer, Blank Capital
Marques brings 15 years of institutional finance and investing experience, having overseen financial planning for a $1.6B defense business unit. He developed the proprietary 6-factor quantitative model used to score PEP and 4,400+ other equities.
PEPSICO INC exhibits a 306% valuation premium relative to institutional benchmarks. This represents a potential valuation overextension based on current multiples.
Return on Assets
Efficiency of asset utilization
8.3%
Sector: 3.1%
Gross Margin
Pricing power and cost efficiency
54.3%
Sector: 26.2%
Operating Margin
Core business profitability
12.3%
Sector: 2.9%
Net Margin
Bottom-line profitability
8.9%
Sector: 1.6%
Factor Methodology
The Quality factor evaluates the persistence and magnitude of cash flows. Companies with scores >70 exhibit superior competitive moats and financial resilience through economic cycles.
Sector Avg Yield0.38%
Yield Delta+897%
Income Projection audit
A $10,000 investment would generate approximately $379 annually in dividends at the current trailing rate.
