PepsiCo (PEP): Buy, Sell, or Hold Post Q2 Earnings?

Since March 2025, PepsiCo has been in a holding pattern, posting a small loss of 4.5% while floating around $147.00. The stock also fell short of the S&P 500’s 11.3% gain during that period.

Is there a buying opportunity in PepsiCo, or does it present a risk to your portfolio? See what our analysts have to say in our full research report, it’s free.

Why Is PepsiCo Not Exciting?

We're swiping left on PepsiCo for now. Here are three reasons why PEP doesn't excite us and a stock we'd rather own.

1. Demand Slipping as Sales Volumes Decline

Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.

PepsiCo’s average quarterly sales volumes have shrunk by 2.3% over the last two years. This decrease isn’t ideal because the quantity demanded for consumer staples products is typically stable.

2. Projected Revenue Growth Is Slim

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect PepsiCo’s revenue to rise by 3.2%, close to This projection doesn't excite us and indicates its newer products will not catalyze better top-line performance yet.

3. Shrinking Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Looking at the trend in its profitability, PepsiCo’s operating margin decreased by 2.1 percentage points over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Its operating margin for the trailing 12 months was 11.4%.

Final Judgment

PepsiCo isn’t a terrible business, but it doesn’t pass our quality test. With its shares trailing the market in recent months, the stock trades at 18.1× forward P/E (or $147.00 per share). While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're pretty confident there are superior stocks to buy right now. We’d suggest looking at a top digital advertising platform riding the creator economy.

Stocks We Would Buy Instead of PepsiCo

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