Is PepsiCo (PEP) Still Attractive After Recent Consumer Staples Inflation Headlines?

Simply Wall St.04-21

If you are wondering whether PepsiCo at around US$156.99 is still a reasonable entry or more of a hold, the key question is how its current price lines up with the value of its future cash flows and ...

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This gives you a mix of shorter term momentum and mixed longer term performance to weigh.\nRecent headlines around...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"PEP":"百事可乐"},"translate_title":"在最近的消费必需品通胀头条新闻之后，百事可乐（PEP）仍然有吸引力吗？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"PEP":1.5},"content_text":"If you are wondering whether PepsiCo at around US$156.99 is still a reasonable entry or more of a hold, the key question is how its current price lines up with the value of its future cash flows and assets. The stock has returned 0.7% over the last 7 days, 4.6% over the last 30 days, 10.4% year to date, 15.2% over 1 year, a 6.4% decline over 3 years, and 27.9% over 5 years. This gives you a mix of shorter term momentum and mixed longer term performance to weigh. Recent headlines around PepsiCo have focused on its role as a large consumer staples company, with attention on how its product portfolio and pricing power fit into broader discussions about inflation and consumer demand. This context often feeds into how investors think about the resilience and risk profile of the stock, which can influence shorter term market sentiment. Right now PepsiCo scores a 3 out of 6 on our valuation checks. The next sections will break down what different valuation methods say about that number, before finishing with a more holistic way to think about whether the current price truly reflects the business.  PepsiCo delivered 15.2% returns over the last year. See how this stacks up to the rest of the Beverage industry. AdvertisementApproach 1: PepsiCo Discounted Cash Flow (DCF) Analysis A Discounted Cash Flow, or DCF, model estimates what a company could be worth by projecting its future cash flows and discounting them back to today using a required rate of return. For PepsiCo, the model starts with last twelve month free cash flow of about $7.9b and uses analyst forecasts and further extrapolations to project cash flows through 2035. For example, projected free cash flow in 2030 is $14.9b, with intermediate years such as 2026 and 2027 at $11.1b and $11.8b. Simply Wall St uses a 2 Stage Free Cash Flow to Equity approach, where the first stage relies more on analyst estimates and the later years are extrapolated based on estimated growth rates. When all those projected cash flows are discounted back and added up, the model arrives at an intrinsic value of about $269.34 per share. The current share price is about $156.99, so this comparison implies the stock is roughly 41.7% undervalued on this measure. Result: UNDERVALUED Our Discounted Cash Flow (DCF) analysis suggests PepsiCo is undervalued by 41.7%. Track this in your watchlist or portfolio, or discover 63 more high quality undervalued stocks. PEP Discounted Cash Flow as at Apr 2026 Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for PepsiCo. Approach 2: PepsiCo Price vs Earnings (P/E) For a profitable business like PepsiCo, the P/E ratio is a useful yardstick because it links what you pay per share to the earnings the company is currently generating. It is a quick way to see how many dollars of price you are paying for each dollar of earnings. What counts as a \"normal\" or \"fair\" P/E depends on how the market views a company’s growth outlook and risk. Higher expected growth and lower perceived risk usually justify a higher P/E, while slower growth or higher risk tend to align with a lower P/E. PepsiCo currently trades at about 24.6x earnings. That is close to its Beverage peer average of 24.3x and above the broader Beverage industry average of 17.4x. Simply Wall St also calculates a proprietary Fair Ratio of 26.3x for PepsiCo, which reflects factors such as earnings growth expectations, industry, profit margins, market cap and company specific risks in one figure. This Fair Ratio can be more useful than a simple comparison to peers or the industry because it ties the P/E back to PepsiCo’s own characteristics rather than assuming all beverage companies deserve similar multiples. With the current P/E of 24.6x sitting below the Fair Ratio of 26.3x, this framework suggests the shares are undervalued on this metric. Result: UNDERVALUED NasdaqGS:PEP P/E Ratio as at Apr 2026 P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 19 top founder-led companies. Upgrade Your Decision Making: Choose your PepsiCo Narrative Earlier it was mentioned that there is an even better way to understand valuation. Narratives take the story you believe about PepsiCo, including its future revenue, earnings and margins, turn that into a financial forecast, tie it to a Fair Value, and then compare that Fair Value to today’s price. All of this happens inside Simply Wall St’s Community page where millions of investors share views. You might see one PepsiCo Narrative that reflects a cautious view with a Fair Value around US$116 and another that is more optimistic at about US$160. As new information such as news or earnings is added, the Narrative updates automatically, helping you decide whether the current price looks high, low, or roughly in line with the story you find most convincing. For PepsiCo however we will make it really easy for you with previews of two leading PepsiCo Narratives: 🐂 PepsiCo Bull Case Fair value: US$160.43 Implied discount to this fair value: about 2.1% Revenue growth assumption: 2%  Focus on digitalization of the supply chain and data driven decision making across procurement, factories, transport and marketing. Expansion in Vietnam, India and Africa, along with acquisitions such as Siete Foods, to broaden both geographic reach and product range. Emphasis on environmental goals, stable margins and a belief that PepsiCo can offer more diversified and healthier products than some peers.  🐻 PepsiCo Bear Case Fair value: US$116.35 Implied premium to this fair value: about 34.9% Revenue growth assumption: 0%  Views PepsiCo as being at an inflection point, with revenue around US$91b and questions about whether new functional and health focused drinks can offset pressure on core snacks and sodas. Highlights both tailwinds from prebiotic and functional beverages and headwinds from health concerns, affordability and strong competition, with an overall expectation of broadly flat revenue. Sees dividends, cost control and supply chain efficiency as important supports for returns, even if top line growth stays limited.  These two narratives frame the current debate around PepsiCo, from a more optimistic view built around digital investment and international growth to a more cautious view that stresses flat revenues and income support. If you want to see how other investors are joining that discussion, See what the community is saying about PepsiCo. Do you think there's more to the story for PepsiCo? Head over to our Community to see what others are saying! NasdaqGS:PEP 1-Year Stock Price Chart  This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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