Is PepsiCo's Frito-Lay Snacks Unit Still the Star Performer?

PepsiCo, Inc.’s PEP Frito-Lay snacks unit continues to be a key growth engine, even as the company navigates a challenging North American market. Management emphasized that the food business remains central to its strategy, with efforts focused on stabilizing the broader snacking category and keeping consumers engaged through value, affordability and innovation. Flagship brands like Cheetos and Doritos are showing strength, while the 'permissible' snacking portfolio — which includes SunChips, PopCorners, Siete and Simply — has grown into a business worth over $2 billion, highlighting Frito-Lay’s ability to capture evolving consumer preferences.

At the same time, PepsiCo is actively refreshing its biggest snack brands to maintain category leadership. The company is relaunching Lay’s and Tostitos with a sharper focus on natural ingredients and 'real food' positioning, eliminating artificial ingredients to strengthen consumer trust. Innovation is also extending into functional snacking, with new offerings in protein and fiber expected across brands like PopCorners and Quaker snacks. This brand reinvestment, combined with expanded distribution and sharper price-pack strategies, underscores why Frito-Lay remains a critical performer in PepsiCo’s portfolio.

Beyond retail, Frito-Lay is expanding its presence in the away-from-home channel, where snacks command higher margins and create incremental consumption occasions. PepsiCo sees this as a long-term growth driver, with innovation and increased physical availability fueling momentum in restaurants, small stores and convenience outlets. While potato chips remain an area of work, management is confident that sequential improvement across subsegments and strong brand equity will keep Frito-Lay in its leading position. Overall, the snacks unit is still the star performer, providing resilience and profitability while driving PepsiCo’s broader growth ambitions.

PEP’s Competitors: MDLZ & CPB’s Smart Moves

In the competitive global snacking landscape, PepsiCo’s Frito-Lay faces strong challenges from rivals like Mondelez International, Inc. MDLZ and The Campbell's Company CPB, both of which have carved out significant positions across key snacking categories.

Mondelez is a major global competitor in the snacking space, with a stronghold in biscuits, cookies and confectionery. Its powerhouse brands like Oreo, Ritz, belVita and Chips Ahoy! dominate the sweet and baked snack categories, while Cadbury and Toblerone strengthen its confectionery leadership. Mondelez has been expanding into healthier snacking options through acquisitions such as Hu, Tate’s Bake Shop and Perfect Snacks, aligning with consumer demand for permissible indulgence. Its global distribution scale and constant innovation make it one of PepsiCo’s most formidable rivals in the broader snacking market.

Campbell’s, through its Snyder’s-Lance portfolio, is a key competitor to PepsiCo in salty snacks, particularly in North America. The company owns well-known brands such as Snyder’s of Hanover pretzels, Cape Cod and Kettle Brand potato chips and Goldfish crackers, giving it a solid presence across both premium and mainstream snack categories. Campbell’s has been focused on flavor innovation, variety packs and better-for-you options to stay relevant with changing consumer preferences. Its strength in iconic brands and targeted snacking categories positions it as a strong challenger to PepsiCo’s Frito-Lay dominance.

PEP’s Price Performance, Valuation & Estimates

Shares of PepsiCo have lost around 1.1% year to date against the industry’s growth of 6.4%.

From a valuation standpoint, PEP trades at a forward price-to-earnings ratio of 18.18X, slightly above the industry’s average of 18.05X.

The Zacks Consensus Estimate for PEP’s 2025 earnings implies a year-over-year decline of 1.8%, whereas its 2026 earnings estimate suggests year-over-year growth of 5.2%. The company’s EPS estimates for 2025 and 2026 have moved northward in the past 30 days.

PEP stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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