PepsiCo Faces Continued Share Losses, Mandates Downgrade

PepsiCo is facing continued share losses, prompting a downgrade. Despite stopping price increases for a few quarters, the company has not seen a recovery. Growth has not ticked back up as expected in 2024. The author thought PepsiCo could recover after peers caught up on price increases, but it has not materialized.

PepsiCo (PEP) has been facing continued share losses, prompting a recent downgrade by analysts. Despite halting price increases for several quarters, the company has not witnessed a recovery. Growth has not rebounded as anticipated in 2024, despite initial expectations that it could recover once peers caught up on price increases. The recent performance has raised concerns among investors and financial professionals.

PepsiCo ended the recent trading session at $148.98, demonstrating a -1.16% change from the preceding day's closing price, lagging behind the S&P 500's daily loss of 0.4%. This move also trailed the Dow's 0.34% loss and the technology-centric Nasdaq's 0.34% decrease [1].

In the past month, shares of PepsiCo had gained 3.48%, while the Consumer Staples sector gained 1.4% and the S&P 500 gained 1.67%. However, the company's upcoming earnings release on October 9, 2025, is expected to show a downward movement in earnings per share (EPS) of 1.73% from the prior year, with a projected EPS of $2.27. The Zacks Consensus Estimate for revenue is projecting net sales of $23.8 billion, up 2.07% from the year-ago period [1].

For the annual period, the Zacks Consensus Estimates anticipate earnings of $8.01 per share and a revenue of $93.08 billion, signifying shifts of -1.84% and +1.33%, respectively, from the last year. Despite these projections, the company's valuation remains a concern, with a Forward P/E ratio of 18.82, which is a premium compared to the industry's Forward P/E of 17.82 [1].

The Zacks Rank, a proprietary model that integrates estimate changes, currently holds PepsiCo at a #2 (Buy) rating. This system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive track record, with #1 stocks contributing an average annual return of +25% since 1988 [1].

Investors should closely monitor any recent changes to analyst estimates for PepsiCo, as these revisions can indicate the company's near-term business trends and profit potential. The Beverages - Soft drinks industry, which PepsiCo is part of, has a Zacks Industry Rank of 75, placing it in the top 31% of all 250+ industries [1].

In conclusion, PepsiCo's recent share losses and downgrade have raised questions about the company's ability to recover from the price increases it halted several quarters ago. While the upcoming earnings release may provide more clarity, investors should remain vigilant and consider the company's valuation and industry rankings when making investment decisions.

References:
[1] https://www.nasdaq.com/articles/pepsico-pep-suffers-larger-drop-general-market-key-insights