PepsiCo plans to cut prices and eliminate some of its products under a deal with an activist investor announced Monday. The Purchase, New York-based company, which makes Cheetos, Tostitos and other Frito-Lay products as well as beverages, said it will cut nearly 20% of its product offerings by early next year. PepsiCo said it will use the savings to invest in marketing and improved value for consumers. It didn't disclose which products or how much it would cut prices. PepsiCo said it also plans to accele ...

Core Viewpoint - PepsiCo reported second-quarter earnings for 2025, showing a slight revenue increase but a significant drop in profits, leading to a 6% rise in stock price due to reiterated outlook and cost-cutting plans [1][6]. Financial Performance - Net revenue for the second quarter was $22.7 billion, reflecting a year-over-year increase of just under 1% [4]. - Revenue in Latin America declined by 7%, offsetting an 8% gain in Europe, the Middle East, and Africa [4]. - The cost of sales increased by 4%, contributing to lower earnings, alongside a $1.9 billion impairment in intangible assets, resulting in net income of approximately $1.3 billion compared to $3.1 billion in the same quarter last year [5]. Outlook and Strategy - The company maintains a revenue growth outlook in the low single digits for the remainder of 2025 [6]. - PepsiCo's turnaround plan focuses on healthier snacks and cost reduction, with an anticipated return of $8.6 billion to shareholders, including $1 billion for share buybacks and $7.6 billion for dividends [6]. Dividend Information - PepsiCo is recognized as a Dividend King, having increased its dividend for 53 consecutive years, with the current annual payout at $5.69 per share, yielding 3.8% [7][9]. Market Position and Challenges - The stock is appealing to income investors due to its high dividend yield compared to the S&P 500 average of 1.2% [9]. - However, stagnant revenue growth has been a persistent issue, with negligible growth in 2024 and a slight decline in Q1 [11]. - The packaged food industry faces challenges from health-conscious consumers and increased regulatory scrutiny on ingredients [11]. Competitive Landscape - Competitors like Coca-Cola are making ingredient changes, which may pressure PepsiCo to follow suit, potentially increasing costs while trying to appeal to health-conscious consumers [12]. Valuation Considerations - PepsiCo's P/E ratio stands at 21, which, despite being above a multiyear low, may not be sufficient to attract growth-oriented investors due to the lack of significant revenue growth [13][16].