Is Pepsi a Good Stock to Buy

Key Takeaways

• Pepsi's profit-to-earnings ratio is lower than usual, indicating it could potentially be undervalued
• Compared to the S&P 500, Pepsi's stock performed -14.16% lower over the last 12 months
• Between Q2 and Q3 of 2024, PepsiCo saw a 3.6% increase in revenue growth

Introduction

As an investor, it would be unavoidable to have missed Pepsi stock as a potential opportunity. But, similar to me, perhaps you are slightly hesitant to add its stock to your portfolio. This is why we will dive into answering if Pepsi is a good stock to buy.

What is Pepsi?

Founded in 1965, PepsiCo is a multibillion-dollar conglomerate that specializes in the snacks, food, and drink industry. They have seen substantial success through their partnerships with food chains and creative advertising across the globe.

PepsiCo's Stock Performance

Market cap: $195.70 billion

Revenue: $91.92 billion

52-week range: $141.51 - $183.41

Industry: Food and Beverage

Compared to the S&P 500, PepsiCo has underperformed throughout the year, trading at -14.16% vs 12 months prior.

Pepsi's Q3 2024 revenue was 3.6% higher compared to its Q2 2024 revenue, showing a steady increase in sales, however, it was 16.2% lower compared to its 2023 Q4 revenue.

PepsiCo's profit-to-earnings P/E ratio is currently at 18.8. This may indicate the stock is currently undervalued, leading to a potential entry into the stock. In addition to this, Pepsi's dividend yield is 3.5%, marking a 15-year high which could make its stock more attractive to investors.

If we take a look at PepsiCo's Relative Strength Index (RSI), it currently stands at 23.77. This may indicate the stock is currently oversold, again pointing us toward a buying opportunity.

With all this in mind, PepsiCo remains a great dividend-paying stock, which is further supported by its vast portfolio of beverages and snacks.

What Market Analysts Are Saying About PepsiCo Stock?

Future Prospects and Considerations

Before we invest in PepsiCo and add its stock to our portfolio, we need to get a stronger understanding of the company's risks and potential prospects.

Risks and Challenges

PepsiCo's revenue has begun to dwindle compared to the growth it saw compared to 2022 and 2023 leading to potential challenges in declining sales, price elasticity, and increasing scrutiny from the U.S. government over its use of plastics.

Furthermore, analysts seem quite hesitant when it comes to upgrading their stock prediction, leading to being potentially bearish on the stock.

Should I Buy Pepsi Stock?

Based on the above analysis, PepsiCo's stocks seem to be in decline and with the future uncertain, I have to agree with the analyst's suggestion of either holding a position or wait-and-see before entering.

Pepsi's stock has historically shown signs of growth, almost 6,156% since listing on the stock market. Furthermore, the company's leadership has remained strong over the past several years since Ramon Laguarta took the CEO position.

Conclusion

Generally, PepsiCo will remain a strong stock in the foreseeable future, due to its strong global sales and the value it holds as a brand. Although it has shown bearish signals, overall it could be a valuable long-term dividend stock for passive investors.

Frequently Asked Questions

Who owns most Pepsi stock?

According to TipRanks, roughly 43%+ is owned by institutional investors whereas 56%+ is owned by public companies and individual investors.

What products does Pepsi sell?

Pepsi sells hundreds of products, most famously they sell Mountain Dew, Doritos, Cheetos, Lay's, Dr Pepper, Quaker, and many many other products.

Should I invest in Pepsi stock?

As a long-term investor, Pepsi might be a viable addition to your portfolio, due to its financial stability and historically high dividend yields.