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1. Company Snapshot

1.a. Company Description

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.

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1.b. Last Insights on PEP

PepsiCo's recent performance was driven by its solid Q2 earnings release, which showcased the company's resilience and long-term investment appeal. The company's innovation-driven growth strategy, cost-cutting initiatives, and strong international sales growth have contributed to its positive momentum. Additionally, PepsiCo's ability to maintain its full-year outlook despite modest revenue growth and falling profits has instilled confidence in investors.

1.c. Company Highlights

2. PepsiCo's Q3 2025 Earnings: A Mixed Bag with Promising Outlook

PepsiCo reported a mixed set of results for its third quarter of 2025, with the company's beverages segment showing volume growth, while its food segment experienced declines. The earnings per share (EPS) came in at $2.29, beating analyst estimates of $2.26. Revenue growth was driven by a combination of volume and price realization, although the exact figures were not disclosed. The company's efforts to rationalize its SKU count and optimize its product portfolio are expected to drive operational efficiency and better customer service.

Publication Date: Oct -09

📋 Highlights
  • Volume Growth in Beverages vs. Food Declines:: Beverage volume increased, while food volume declined due to promotional strategy shifts and smaller pack sizes, with no specific figures provided.
  • 2026 Top-Line Growth Drivers:: Expected material progress from brand interventions (Pepsi, Lays), growth platforms (away-from-home, functional hydration), and innovation in protein/fiber products.
  • Margin Improvements via Cost Actions:: Frito-Lay cost rationalization (manufacturing closures, warehouse optimization) to boost productivity, with carryover benefits projected in 2026.
  • International Recovery Outlook:: Mid-to-high single-digit growth expected by 2026, despite Q3 weather-related challenges, with China and India highlighted as key regional opportunities.
  • Strategic Acquisitions and Innovation:: Expansion through Poppy, Sabra, Alani Nu acquisitions and internal development (e.g., Muscle Milk) to address health trends, with no financial figures disclosed.

Segment Performance

The beverages segment saw volume growth, driven by the success of the Pepsi brand, particularly its non-sugar variants. The company's international business faced challenges in Q3 due to poor weather, but showed improvement in September. The company expects to return to mid-to-high single-digit growth in its international business. In contrast, the food segment experienced volume declines, attributed to changes in promotional strategy and a pivot to smaller pack sizes.

Outlook and Guidance

PepsiCo expects balanced growth between volume and price realization going forward. The company is optimistic about top-line growth acceleration in its North America Beverages (PBNA) and international businesses, driven by service level improvements, innovation, and a robust pipeline. For 2026, PepsiCo expects to see material progress on top-line growth, driven by several areas, including being "brilliant at the basics," interventions in big brands, and accelerating growth platforms like away-from-home and permissible snacks.

Valuation and Metrics

With a P/E Ratio of 27.43 and an EV/EBITDA of 17.43, PepsiCo's valuation appears to be reasonable, considering its expected revenue growth of 3.1% next year. The company's Dividend Yield of 3.84% and Free Cash Flow Yield of 4.69% also provide a attractive return profile for investors. Additionally, PepsiCo's ROE of 38.92% and ROIC of 9.87% indicate a strong ability to generate returns on equity and invested capital.

Cost Structure and Efficiency

PepsiCo is making intentional actions to right-size Frito Lay's fixed cost structure, including manufacturing node closures and go-to-market adjustments. These actions are expected to drive productivity improvements, with a significant carryover benefit in 2026. The company's efforts to transform its cost structure and become more agile and flexible through technology investments are also expected to drive long-term efficiency.

Strategic Initiatives

PepsiCo is leveraging its existing platforms, such as Muscle Milk and Propel, to address the growing demand for protein beverages. The company is also making strategic acquisitions, such as Poppy, Sabra, and Alani Nu, which are expected to contribute to growth. The recent announcement of a new CFO, Steve, reflects the company's strategy to drive growth and transformation.

3. NewsRoom

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Market Today: WBD Sale Bids, Meta Cuts, Apple Shake-Up

Dec -04

Source: gurufocus.com

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PepsiCo Nears Settlement With Activist Investor Elliott

Dec -04

Source: wsj.com

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Market Today: Fed hopes lift stocks; AWS AI rollout; Prada-Versace deal

Dec -03

Source: gurufocus.com

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The Dividend Income Strategy That Helps You Sleep Better at Night

Dec -03

Source: 247wallst.com

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2 Energy Drink Stocks to Buy for a Stable Portfolio in 2026

Dec -03

Source: zacks.com

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First Look: Airbus trims targets, AWS AI, AEO hikes outlook

Dec -03

Source: gurufocus.com

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Market Today: Deal Talks, Retail Wins, AI Chips, and Crypto Volatility

Dec -02

Source: gurufocus.com

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Can PepsiCo Achieve Its Mid-Teens PBNA Margin Ambition by 2026?

Dec -01

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.37%)

6. Segments

Pepsi Co Beverages North America

Expected Growth: 4.5%

PepsiCo Beverages North America's growth is driven by increasing demand for low-calorie beverages, expanding distribution channels, and strategic marketing initiatives, including e-commerce platforms and partnerships with foodservice providers.

Frito-Lay North America

Expected Growth: 4.2%

PepsiCo’s snack food division is expected to grow driven by increasing demand for convenient and healthy snacks, expansion of e-commerce channels, and strategic acquisitions, such as the purchase of Pioneer Foods, which will strengthen the company’s position in the North American market.

Europe Continent

Expected Growth: 2.5%

PepsiCo, Inc.'s European operations expect steady growth driven by increasing demand for healthier beverages, expansion in Eastern Europe, and strategic partnerships, which will contribute to a moderate growth rate.

Latin America

Expected Growth: 5.6%

PepsiCo's Latin American operations are driven by increasing demand for convenient and healthy beverages, particularly in Mexico and Brazil, where the company has a strong presence. The region's growing middle class and urbanization are also contributing to the segment's growth.

Africa, Middle East and South Asia

Expected Growth: 5.2%

PepsiCo's Africa, Middle East and South Asia region is expected to grow driven by increasing urbanization, a growing middle class, and rising demand for convenience foods and beverages, particularly in countries such as Nigeria, Egypt, and India.

Asia Pacific, Australia and New Zealand and China Region

Expected Growth: 6.2%

PepsiCo's Asia Pacific, Australia, New Zealand and China region is driven by increasing demand for healthy beverages, growing middle-class populations, and rising urbanization rates.

Quaker Foods North America

Expected Growth: 3.5%

Quaker Foods North America's growth is driven by increasing demand for healthy and convenient food options, as well as the division's strong brand portfolio, including Quaker Oats and Life cereal. Innovation in new products and packaging will also support growth.

7. Detailed Products

Pepsi

A carbonated soft drink that is crisp, refreshing, and perfect for any occasion

Lay's Potato Chips

A delicious and crunchy snack made from potatoes, perfect for munching on the go

Gatorade

A sports drink that helps replenish electrolytes and fluids, perfect for athletes and fitness enthusiasts

Tropicana Orange Juice

A 100% orange juice that is a great way to start your day with a boost of vitamin C

Quaker Oats

A warm and comforting bowl of oatmeal that's perfect for a healthy breakfast

Doritos

A flavorful and crunchy tortilla chip that's perfect for snacking

Cheetos

A cheesy and addictive snack that's perfect for munching on the go

Mountain Dew

A sweet and citrusy soft drink that's perfect for a quick energy boost

Aquafina

A refreshing and pure bottled water that's perfect for staying hydrated

8. PepsiCo, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

PepsiCo, Inc. faces moderate threat from substitutes, as consumers have various beverage options available in the market. However, the company's strong brand portfolio and diversified product offerings mitigate this threat to some extent.

Bargaining Power Of Customers

PepsiCo, Inc. has a large and diversified customer base, which reduces the bargaining power of individual customers. Additionally, the company's strong brand presence and wide distribution network make it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

PepsiCo, Inc. has a moderate level of dependence on its suppliers, particularly for raw materials like sugar, corn, and other ingredients. However, the company's large scale of operations and long-term contracts with suppliers help mitigate this risk.

Threat Of New Entrants

The threat of new entrants is low in the beverage industry, as it requires significant investment in manufacturing, marketing, and distribution. PepsiCo, Inc.'s strong brand presence, extensive distribution network, and economies of scale make it difficult for new entrants to compete.

Intensity Of Rivalry

The beverage industry is highly competitive, with PepsiCo, Inc. facing intense rivalry from Coca-Cola, Dr Pepper Snapple, and other players. The company's strong brand portfolio and marketing efforts help it maintain its market share, but the rivalry remains a significant challenge.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 70.71%
Debt Cost 3.95%
Equity Weight 29.29%
Equity Cost 6.56%
WACC 4.71%
Leverage 241.37%

11. Quality Control: PepsiCo, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

145.02$

Current Price

145.02$

Potential

-0.00%

Expected Cash-Flows