PepsiCo, Inc.
Orin's own judgment of how firmly the evidence points one way — not the chance the price goes up.
PEP is a cheap stock with a credibility problem: fiscal Q3 2026 EPS of $2.34 beat the $2.29 estimate and revenue growth has accelerated (Q1 2026 +8.5%, Q2 2026 +6.4% YoY), but management lowered its full-year earnings forecast with the October 8 report, undercutting the turnaround narrative just as the stock sits at multi-year lows ($123.73, below both its 50-day MA of $136.10 and 200-day MA of $146.88, RSI 21.8).
The valuation is undeniably deep — 16.2x P/E and 11.4x EV/EBITDA versus peer medians of 29.2x and 20.3x — but the discount reflects real deterioration: FY2025 net income fell 14.0% and total debt rose to $49.9B from $44.9B in FY2024. The setup is a potential value trap until the guidance cut is reversed, so the right call is to wait for proof the North America recovery is real rather than pay for hope at the bottom of a downtrend.
What could go wrong
- Guidance credibility. The company lowered its full-year earnings forecast alongside the Q3 2026 beat (CNBC, 8 Oct), suggesting management sees margin or demand pressure the headline numbers don't yet show.
- Rising leverage. Total debt climbed to $49.9B in FY2025 from $44.9B in FY2024 while net income fell 14.0%, pressuring the balance sheet behind the dividend.
- Value trap / momentum. The stock is in a major 2026 downtrend, trading below its 50-day ($136.10) and 200-day ($146.88) moving averages, and cheap staples names can stay cheap while fundamentals stagnate.
- North America demand. Commentary ahead of the print (GuruFocus, 7 Oct) noted investors are still searching for proof the North America recovery is gaining traction — the core swing factor for the franchise.
What would change my mind
Where this comes from: earnings vs estimates · news, 8 Oct · quarterly results · peer comparison. Orin's read on PEP; not advice.
How has the share price moved?
Down 12.5% over twelve months, from $152.63 on 27 Oct 2025 to $133.50 at the Tue 27 Oct 2026 close. Its highest close in that time was $170.49 on 6 Feb 2026; the last close is 21.7% below it.
- Green line: the closing price each trading day.
- Grey line: the average closing price over the last 50 trading days.
- Dashed amber line: the same over the last 200 trading days — a slower, smoother line.
- Bars along the bottom: shares traded each day — green when it closed higher than the day before, rose when lower (the most, 24.0M, on 8 Oct 2026).
- Flags: the company's filings, on the day they were made (a 10-Q is the quarterly report and a 10-K the annual report; an 8-K reports a major event).
On file
All PEP filingsLargest holders · 13F Q2 2026
Money flow| Filer | Position | Of fund |
|---|---|---|
| BlackRock | $16.0B | 0.2% |
| Vanguard Capital Management | $12.1B | 0.3% |
| State Street | $8.2B | 0.2% |
| Invesco | $5.8B | 0.5% |
| Vanguard Portfolio Management | $5.0B | 0.2% |
| Charles Schwab Investment Management | $4.9B | 0.7% |
| Geode Capital Management | $4.7B | 0.3% |
| JPMorgan Chase | $4.2B | 0.2% |
| Morgan Stanley | $3.6B | 0.2% |
| Bank of America | $2.8B | 0.2% |
159 of the 815 filers we track · quarter ended Q2 2026 · positions, not flows
Insiders, last 24 months: 126 Form 4 filings; open-market trades net $13.5M. Of the 50 on hand, 4 were open-market purchases and 3 sales — the rest are grants, option exercises and tax withholding.
Ask Orin about PEP
Orin answers questions about PEP from its filings, transcripts and numbers — with the source behind every claim. Your own desk starts with 3 free days, card required.
Start 3 free days →How is it priced, against its own past and its sector?
Priced at 16.8× its last 12 months of profit (Tue 27 Oct close) — lower than in all 5 of its last 5 fiscal years (middle 25.8×); the typical Consumer Defensive company on the NASDAQ is at 37.9×.
| Measure | Now | Its usual | Sector |
|---|---|---|---|
| P/E | 16.8×below usual | 25.8× | 37.9× |
| P/S | 1.85×below usual | 2.55× | — |
| EV/EBITDA | 11.6×below usual | 17.1× | — |
| P/B | 8.2×below usual | 12.6× | — |
- "Its usual" is the middle of its own last 5 fiscal years.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
P/S: the company's total market value divided by one year of revenue. Used when there is no profit to measure.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
P/B: the share price divided by the book value per share — what the company owns minus what it owes, as its accounts record it. When book value is tiny, P/B swings wildly and says little.
What do the analysts who cover it publish?
The analysts' average 12-month price target is $142 (from $132 to $165) — 7% above the Tue 27 Oct close price. That is their published opinion, not Orin's.
$142
$132 – $165 · +7% against the last close
- 3 buy or overweight
- 13 hold
- 0 underweight or sell
Price target: the share price an analyst publishes for about 12 months ahead. It is the opinion of the firm that wrote it; the average is across the firms that cover the company.
Overweight / underweight: analysts' rating words: overweight means the firm expects the stock to do better than the others it covers, underweight worse. Their words, not Orin's.
How is it priced next to the companies it is compared to?
Priced at 16.8× its last 12 months of profit; the middle P/E of the 6 companies it is compared to that made a profit is 24.8×.
| Company | Market value | P/E | EV/EBITDA | Gross margin | Net margin | ROE |
|---|---|---|---|---|---|---|
| PEPPepsiCo, Inc. | $182B | 16.8× | 11.6× | 54.2% | 11.1% | 51% |
| CPBCampbell Soup Company | $6B | 15.4× | 10.1× | 28.1% | 4.1% | 10% |
| GISGeneral Mills, Inc. | $18B | lost money | 9.3× | 33.6% | −4.9% | −11% |
| HSYThe Hershey Company | $33B | 22.3× | 14.5× | 38.1% | 12.2% | 32% |
| KDPKeurig Dr Pepper Inc. | $47B | 35.1× | 20.0× | 49.4% | 7.1% | 6% |
| KOThe Coca-Cola Company | $392B | 26.8× | 20.6× | 62.3% | 28.7% | 42% |
| MDLZMondelez International, Inc. | $80B | 22.8× | 16.0× | 31.1% | 8.9% | 13% |
| MNSTMonster Beverage Corporation | $94B | 43.1× | 31.6× | 55.3% | 22.7% | 24% |
- GIS: lost money over the last 12 months, so no P/E.
- The list of companies is the data vendor's choice, so it can include a company a person would not have picked.
Market value: the share price times the number of shares — what the whole company is priced at.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
Gross margin: the share of each $1 of sales left after the direct cost of making what was sold.
Net margin: the share of each $1 of sales kept as profit after every cost. Below zero, the company lost money.
ROE: return on equity: one year of profit as a share of the shareholders' money in the business (its book value).
Is it priced high or low compared with its own past?
Priced at 16.8× its last 12 months of profit (Tue 27 Oct close). It has no full fiscal year on file since its history starts, so there is nothing of its own to compare with.
- Now16.8×
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
Fiscal year (FY): the company's own 12-month accounting year, which need not match the calendar year.
How has its sector been priced?
Consumer Defensive companies on the NASDAQ were priced at a typical 37.9× their yearly profit (Tue 27 Oct close).
- Now37.9×
- Each year is the middle of that calendar year's daily sector P/E; "Now" is the Tue 27 Oct close figure, the same one in the table above.
Sector P/E: the middle P/E of the companies in the same sector on the same stock exchange, as the data vendor works it out each day.
What does a cash-flow model say a share is worth?
A standard cash-flow model puts it at $177 a share — 33% above the $133.06 price it was computed against (27 Oct).
| Model | Value a share | Against the price then |
|---|---|---|
| Standard | $177 | 33% above $133.06 |
| Levered | $138 | 4% above $133.06 |
Discounted cash flow: a model's estimate of what the company is worth today, from the cash it is forecast to make in future years. Small changes in the forecast move it a lot, and it says little about a company that loses money.
Standard / levered: two versions of the cash-flow model: the standard one counts the cash before the company pays its lenders, the levered one after.