Steven Fiorillo
Seeking Alpha Analyst, Basis Point Podcast Co-Host
PepsiCo is an easy buy for a long-term dividend portfolio because its diversified brands can adapt to shifting health trends. Gatorade, soda, snacks and energy drinks are categories people will never stop consuming, and the recent Poppi purchase shows that adaptability, making PepsiCo preferable even to McDonald's. @TheRonnieVShow notes the stock sits on a 17-year trendline that has held since 2009. x.com x.comÂ
Director Robert Pohlad's $23.7 million open-market share purchase bolsters PepsiCo's risk/reward case. Buying this very solid company near its 200-month moving average looks like a solid setup. x.comÂ
PepsiCo's forecast for another year of just 3% growth leaves it nowhere close to cheap. It trades at 16 times 2027 earnings. x.comÂ
PepsiCo is cheap against its cash earnings, trading at 12x, or 11x next year's, while beverage companies usually get 17x. That puts fair value at $189.68 to $241.41, 17x next year's cash earnings give or take 12%, leaving $128.50 about 32% under the low end. This is a valuation-levels read off reported earnings and revenue estimates, not fundamental work. x.comÂ
PepsiCo's valuation discount to Coca-Cola doesn't make sense: it trades at 17.75x earnings versus Coca-Cola's 26.70x, whatever one thinks of their sodas. x.comÂ
PepsiCo is under pressure because consumers can no longer really afford a can of soda, as the company cut its profit outlook citing a slower North American recovery. The stock is approaching its monthly 200-period moving average, a secular bear-market line that breaks only during economic depressions. If it breaks, $75 is the next level. x.comÂ
Coca-Cola's retained earnings do little for shareholders when management does not distribute much of the growth. At 27 times earnings, a 2.3% yield with no expected large dividend hikes, special dividend or meaningful buybacks makes look-through earnings a poor basis for the price: EPS rose about $1 in five years while dividends rose only 52 cents. x.com x.com x.com x.comÂ
PepsiCo offers a share-price recovery bet as international growth continues and North American demand has room to improve. It owns Pepsi, Lay's, Doritos and Gatorade; Q2 revenue rose 6.4% to $24.2 billion, international beverages organic revenue grew 9%, and management still expects 5-7% core EPS growth in 2026. The recovery still has to happen, as North American beverage volume fell 4% last quarter. x.comÂ
PepsiCo looks unattractive because, since Covid, supermarket sections where shoppers used to load up on its products have looked empty. The bearish view dates back to 2021. x.comÂ
Insider buying points to opportunity in PepsiCo shares despite the market's pessimism. Former PepsiAmericas CEO Robert Pohlad spent $23.7 million on the stock during its deepest drawdown since the 2008 financial crisis. x.comÂ