In the last year, shares of food and beverage firms trended lower, with some exceptions. Mondelez (MDLZ) traded at an uptrend while Coca-Cola (KO) traded close to its high for the year.
Pepsi (PEP) shares struggled. The stock peaked at over $170 in February. It closed last week at $125.97. The firm’s stock barely rose after posting third-quarter results.
Pepsi earned $2.34 in EPS on revenue of $25.27 billion (+5.6% Y/Y). For FY 2026, it expects EPS growth of 5.04%. At a dividend yield of around 4.6%, PEP stock should start attracting newer income investors.
Pepsi is accelerating its organic revenue. Global beverage volume increased by 3% in Q3. Overall, international organic revenue is rising, up 8% in the last quarter. Operating margin expanded. Its food business sales increased in North America. But its beverage business decelerated.
The company continued to invest in the business to sustain its growth. To boost profits, it identified structural cost reductions. It will use revenue management tools in the coming months to relieve its margin pressure in the fourth quarter.
Pepsi’s beverage business needs to improve. It is working on strengthening its competitive positioning for soft drinks, energy, and hydration products.
Your Takeaway
Pepsi has historically navigated through the inflationary environment. Consumers are clearly challenged in the next 12-18 months. It will address affordability by offering the right size, format, and price points for consumers.
Pepsi is a good value stock to consider at near its 52-week lows.
