I am genuinely torn on PepsiCo right now because while on paper it looks like a great value play, the risks make me hesitate. On the positive side, seeing the stock drop from $180 down to around $126 means it is trading at roughly 16.5x forward earnings, which is a huge 34% discount to its 10-year historical average of 25x and way below Coca-Cola at 26x, all while pulling in over $90 billion in annual revenue with $7.64 in TTM EPS and paying a solid dividend. It feels like a steal with board members acquiring stock units at the $125 level.
But on the risk side, you have real consumer fatigue after years of aggressive price hikes, sluggish 2% to 4% top-line growth, and the lingering threat of GLP-1 weight-loss drugs curbing snacking habits long term. I keep going back and forth on whether this is just temporary friction in a legendary business or a sign that volume growth is structural, but getting in at a 16.5x multiple with management backing the valuation floor feels awfully tempting.
I'm tempted to start a position today before earnings but I think I'll wait for the earnings release and guidance.