PepsiCo's Stock Price is Disconnected From Reality: Time to Buy

Core Viewpoint - PepsiCo's stock is under pressure in H1 2025, with potential declines below $130, but this presents an entry point for dividend growth investors [2][5][12] Financial Performance - The company reported a 1.8% decline in revenue for Q1, but the revenue remains near historically high levels, outperforming consensus by 100 basis points [8][9] - Adjusted earnings fell by 4% in Q1, slightly missing analysts' forecasts, while the company reaffirmed its 2025 revenue outlook but trimmed its earnings forecast [11] Growth and Dividends - PepsiCo's dividend was valued at $5.44 in FY2024, expected to grow at a 5% pace in 2025, with a payout ratio around 70% [6] - The company is also engaging in share buybacks, reducing share count by 0.36% in FY2024 and 0.3% year-over-year in Q1 FY2025 [7] Market Sentiment and Analyst Ratings - Analysts have set a 12-month stock price forecast for PepsiCo at $162.00, indicating a 21.46% upside from the current price [8] - There is a growing conviction in the Hold rating among analysts, with coverage increasing by 64% since early 2024 [13] Challenges and Headwinds - PepsiCo is facing headwinds in 2025, including margin pressure due to tariffs and increased supply chain costs [10] - Organic growth was reported at 1.2%, with weaknesses in certain regions not offsetting overall strengths [9]