Is PepsiCo a Buy, Sell, or Hold in 2025?

Core Viewpoint - PepsiCo is experiencing its worst decline in years, with a 25% drop since its all-time high in 2023, marking the largest fall since the financial crisis of 2007-2009 [2][6] Group 1: Growth and Revenue - PepsiCo's growth has increasingly relied on price increases since the COVID-19 pandemic, with organic revenue growth of 2% in 2024, but a 1% decline in volumes [4][5] - The price of snacks and beverages has risen significantly, with potato chips up 44% and soda prices up 33% since January 2020, indicating inflation-driven growth rather than increased sales volume [3][4] Group 2: Financial Health - Despite the decline in share price, PepsiCo maintains a strong financial position with a dividend payout ratio of approximately 65% of 2025 earnings estimates and $9.2 billion in cash [6][7] - The company is recognized as a Dividend King, having raised dividends for 52 consecutive years, which remains attractive to investors [6][7] Group 3: Market Valuation - The stock's price-to-earnings ratio and long-term growth estimates have fallen to multiyear lows, prompting caution regarding valuation [8][9] - The dividend yield has increased to 3.7%, the highest ever, providing immediate income for investors amid lower growth expectations [9][10] Group 4: Future Outlook - While growth may slow, PepsiCo's established brands and market presence suggest modest growth and incremental dividend increases are still likely [7][10] - The current valuation at nearly 21 times earnings is considered high for expected growth rates of 4% to 5%, leading to a recommendation for a more appealing price-to-earnings ratio closer to 15 to 17 [9][10]