Wall Street Outlook on PepsiCo Shares: Bullish or Bearish?
PepsiCo's Steady Growth and Dividend Yield
PepsiCo, a global leader in the food and beverage industry, headquartered in Purchase, New York, continues to impress investors with its consistent performance. The company has topped the earnings consensus estimate in three out of the four trailing quarters, demonstrating its resilience.
The company's annual dividend has increased for 53 consecutive years since 1965, a testament to its financial stability and commitment to shareholders. Recently, PepsiCo declared a quarterly dividend of $1.4225 per share, marking a 5% increase from last year.
Analysts forecast PepsiCo’s EPS to increase from about $8.30 to $8.84 per share over the next year, reflecting a growth of approximately 6.51%. This aligns closely with the Zacks 2026 EPS growth forecast, which predicts a growth of around 5.2% compared to the prior year.
Despite a slight decline in EPS of around -1.8% expected for 2025, analysts project a rebound in 2026, with PepsiCo's EPS projected to grow by approximately 5.2%. Specifically, the Zacks Consensus Estimate indicates EPS estimates for 2025 have slightly declined but were revised upward by about 1.8% over the last 30 days, and the 2026 EPS estimate has also recently increased by about 1.8%.
PepsiCo's stock is currently trading with a forward 12-month price-to-earnings (P/E) ratio of approximately 17.53x, which is below the industry average of about 18.03x and significantly lower than key competitors like Coca-Cola and Monster Beverage. This valuation gap could imply potential stock price appreciation if PepsiCo meets or exceeds earnings expectations. Its current trading price is near $139+, with a 1-year range from about $127.60 to $180.91.
The consensus rating for PEP stock is a "Moderate Buy," based on six "Strong Buy," 13 "Hold," and one "Strong Sell" ratings. UBS Group AG reaffirmed its "Buy" rating on PepsiCo, citing improved confidence in the company's growth outlook. The mean price target of $152.05 represents a 5.6% upside to PEP's current price.
It's worth noting that PepsiCo operates in the Consumer Staples sector, specifically within the beverages-non-alcoholic industry. The S&P 500 Index has risen 7.8% YTD and 21.9% over the past year, while the Consumer Staples Select Sector SPDR ETF has gained 4.6% YTD and around 5% over the past year.
However, post-announcement of the dividend, PepsiCo's shares declined marginally due to macroeconomic headwinds. Over the past year, the company's stock has also declined by about 16.2%.
For more information, please view the Disclosure Policy on the website. Kritika Sarmah did not have positions in any of the securities mentioned in the article at the time of publication.
[1] Zacks Investment Research [2] MarketBeat [3] UBS Group AG [4] Yahoo Finance [5] Nasdaq
Investors considering the stock-market might find PepsiCo an attractive choice for its steady growth and dividend yield, as the company has consistently exceeded earnings estimates and increased its annual dividend for 53 consecutive years. Furthermore, PepsiCo's forward P/E ratio is below the industry average and its stock is currently trading near $139+, indicating potential for stock price appreciation if it meets or surpasses earnings expectations.
