The Zacks Beverages – Soft Drinks industry is facing mounting pressures as rising input costs and tariff uncertainty strain margins and complicate production planning. Volatile prices for sugar, packaging materials and transportation are forcing companies to reassess pricing and supply-chain strategies, all while navigating unpredictable tariffs on key ingredients and machinery. These challenges risk weakening competitiveness, especially in price-sensitive markets. Even as cost pressures intensify, major op ...

I'm Susan Jabinsky, co-host of the Morning Filter podcast. The holidays are upon us. Why not spread some holiday cheer by gifting a stock to a close family member or friend.Or how about giving them some money they can invest themselves along with a good stock tip or two from Morning Star. Today, we're talking about three stocks we think would make good holiday gifts as long-term investments. All of these stocks are from companies with wide economic moes.We expect companies with wide moes to remain competiti ...

PepsiCo is disappointing investors this year, but it offers dividend dependability and rebound potential if an activist investor can work some magic.For all the talk about the wind possibly coming out of the sails of the artificial intelligence (AI) trade, a real sector rotation hasn't played out.Recent headlines suggest investors are skittish about what the near term holds for growth and technology stocks. Such jitters often compel market participants to move into defensive sectors, but broadly speaking, c ...

In July, I downgraded PepsiCo, Inc. (NASDAQ: PEP ) stock from a buy to a hold rating. In that article, I cited tariff headwinds as they weighed on North America sales and also eroded margins. With theI'm a full-time investor with a strong focus on the tech sector. I graduated with a Bachelor of Commerce Degree with Distinction, major in Finance. I'm also a proud lifetime member of the Beta Gamma Sigma International Business Honor Society. My core values are: Excellence, Integrity, Transparency, & Respect. I ...

Core Insights - PepsiCo Inc. (PEP) shares have experienced a decline following the release of its third-quarter 2025 results, indicating a shift in investor sentiment from bullish to bearish [2][3] - The stock closed at $143.60 on November 3, 2025, falling below its 50-day simple moving average (SMA) of $145.5, which is a technical indicator of weakness [2][10] - Despite the recent downturn, PepsiCo's stock remains above its 200-day SMA, suggesting a more favorable long-term outlook [4] Performance Comparison - Over the past month, PepsiCo's stock has declined by 4.2%, contrasting with a 3% growth in the Zacks Beverages – Soft Drinks industry [6] - The stock has underperformed compared to the broader Zacks Consumer Staples sector, which saw a decline of 0.5%, and the S&P 500, which increased by 1.6% [6] - Competitors such as The Coca-Cola Company (KO) and Monster Beverage Corporation (MNST) have seen stock increases of 5.6% and 4.3%, respectively, during the same period [7] Financial Performance - PepsiCo reported a 3% revenue growth in Q3 2025, despite facing cost pressures that impacted profitability [10][12] - The company is currently trading at a forward P/E ratio of 16.79X, which is below the industry average of 17.8X and the S&P 500's average of 23.3X [22][23] - The Zacks Consensus Estimate for PepsiCo's 2025 sales suggests a year-over-year growth of 1.8%, while EPS is expected to decline by 0.6% [17] Strategic Initiatives - To address operational challenges, PepsiCo is implementing cost-cutting measures, streamlining product offerings, and optimizing its price-pack architecture [14][20] - The company has maintained strong international performance, achieving 18 consecutive quarters of mid-single-digit organic growth [15] - Recent acquisitions and partnerships are aimed at enhancing PepsiCo's presence in functional beverages and healthier snack segments [20][21] Market Outlook - Analysts have revised earnings estimates upward for 2025 and 2026, indicating growing confidence in PepsiCo's growth potential [16] - The company's fundamentals remain robust, with a focus on innovation and structural efficiency to drive long-term growth [21] - Despite short-term headwinds, PepsiCo is positioned for gradual improvement in margins and profitability, making it an attractive opportunity for investors [26][27]

Core Insights - PepsiCo (PEP) has returned a total of $73 billion to its investors over the past decade through dividends and share repurchases, ranking as the 32nd highest capital return to shareholders in history [2][3] Capital Return Analysis - Dividends and share repurchases are direct returns of capital to shareholders, reflecting management's confidence in the company's financial health and ability to generate sustainable cash flows [3] - The total capital returned to shareholders as a percentage of current market cap appears inversely related to growth potential for reinvestments, with companies like Meta and Microsoft showing faster growth but lower capital returns [5] Financial Performance - PepsiCo's revenue growth is reported at 0.5% for the last twelve months (LTM) and an average of 3.4% over the last three years [10] - The company has a free cash flow margin of almost 7.3% and an operating margin of 13.2% LTM [10] - The stock is currently trading at a price-to-earnings (P/E) ratio of 27.1 [10] Historical Risk - PepsiCo has experienced significant sell-offs in the past, including a drop of approximately 26% during the Dot-Com bubble, nearly 40% during the Global Financial Crisis, and around 18% during the recent inflationary period [8]

Group 1 - Two of the world's largest consumer staples companies, Coca-Cola and PepsiCo, are currently attractively priced and are both Dividend Kings, indicating their strong business resilience [2][9] - Coca-Cola, with a market cap of approximately $300 billion, is the leading non-alcoholic beverage maker globally, known for its iconic brands and extensive distribution [3] - Coca-Cola has a long history of annual dividend increases, with over six decades of consistent growth, making it the second longest Dividend King in the consumer staples sector [4] Group 2 - The stock of Coca-Cola is currently undervalued, with its price-to-earnings and price-to-book value ratios below their five-year averages, despite a 2.9% dividend yield that is average for the stock [6][7] - PepsiCo, another major player in the consumer staples sector, offers a more diversified business model, including beverages, snacks, and packaged foods, making it a strong competitor to Coca-Cola [8]

Core Insights - Dr Pepper has surpassed Pepsi to become the second-best-selling soda brand in the United States, while Coca-Cola remains the market leader [1][6][7] - The cola wars have officially concluded, with Dr Pepper emerging as a new challenger in the market [2] - Dr Pepper has adopted a more experimental approach by introducing various new flavors and limited-time offerings [3][8] Market Position - Coca-Cola holds 19.2% of the U.S. carbonated soft drink market, while Dr Pepper has captured 8.3%, recently overtaking Pepsi, which now stands at 8.0% [7] Product Innovation - Dr Pepper has launched several new flavors, including Dr Pepper Blackberry (2025), Dr Pepper Zero Sugar Creamy Coconut (2024), and Dr Pepper Strawberries & Cream (2023), with some becoming permanent offerings due to strong sales [7] - The company has also utilized creative flavor promotions through its rewards program, introducing unique flavors like Fantastic Chocolate and Nashville Reserve [8] Discontinuation of Flavors - Dr Pepper has not hesitated to discontinue flavors that do not resonate with consumers, such as Dark Berry and Diet Cherry Chocolate [9]

Core Insights - PepsiCo, Inc. is navigating a challenging cost landscape but has renewed confidence in its productivity initiatives, achieving nearly 3% reported net revenue growth in Q3 2025, driven by international market strength and marking its 18th consecutive quarter of mid-single-digit organic revenue growth [1][9] - Despite revenue growth, profitability is under strain due to higher supply chain costs, which created a three-percentage-point drag on margins, partially offsetting benefits from pricing actions and cost optimization [2][9] - The company is implementing aggressive cost-reduction and automation strategies, including reducing over 35% of SKUs since 2022 and cutting about 7% of full-time headcount in Frito-Lay, aimed at improving service levels and stabilizing margins [3][9] Financial Performance - PepsiCo's gross margin is under pressure from elevated supply chain costs, primarily from global inputs, ingredients, and tariffs, which have impacted overall profitability [2][9] - The company targets stronger margins, with PBNA aiming for mid-teens profitability and Foods North America focusing on cost discipline, expecting low-single-digit revenue growth and ongoing productivity gains to restore margins [4] Competitive Landscape - Coca-Cola and Keurig Dr Pepper are also managing margin pressures effectively, leveraging pricing power and productivity gains to sustain profitability amid a challenging cost environment [5] - Coca-Cola reported a 59% year-over-year surge in operating income to $3.98 billion, with its operating margin increasing to 32% from 21.2% a year ago, showcasing strong margin management capabilities [6] - Keurig Dr Pepper experienced a 7.9% year-over-year increase in adjusted gross profit to $2.35 billion, despite a decline in gross margin due to ongoing inflationary pressures [7] Stock Performance and Valuation - PepsiCo shares have gained 5.1% in the past three months, outperforming the industry’s rise of 2.7% [8] - The company trades at a forward price-to-earnings ratio of 17.70X, slightly below the industry average of 18.31X [10] - The Zacks Consensus Estimate for PepsiCo's 2025 earnings implies a year-over-year decline of 0.6%, while the 2026 earnings estimate indicates growth of 5.6% [11]

Group 1 - Dr. Pepper has tied with Pepsi for the second most popular soft drink in the U.S., following Coca-Cola [2] - Both PepsiCo and Keurig Dr Pepper have underperformed the broader market in 2024, with the S&P 500 gaining 17%, while PEP's stock is flat and KDP's stock is down about 10% [2] - KDP is considered a better investment option compared to PEP due to its lower valuation and stronger growth in revenue and operating income [3][6] Group 2 - KDP currently trades at a lower Price-to-Operating Income multiple compared to PEP, indicating a more attractive valuation [6] - KDP shows greater revenue and operating income growth despite its lower valuation, suggesting a potential for better investment returns [6] - An analysis of the past year's metrics may indicate whether PepsiCo's stock is overvalued compared to its competitors, with continued underperformance strengthening this inference [7]