Shares of PepsiCo Inc. PEP hit a new 52-week low of $154.11 yesterday, before rising 0.2% to close trading at $154.43. The current price reflects a 15.8% discount from its 52-week high of $183.41, highlighting a challenging year for the beverage company. Overall, the PEP stock has trended downward in the past year, driven by challenges in its North America operations since the start of 2024, including reduced consumer demand and product recalls in the QFNA segment.

In the past year, PEP shares have declined 6.7% against the broader industry’s 4.8% rise and the Zacks Consumer Staples sector’s 5.6% growth. The stock has also underperformed the S&P 500’s rally of 29.6% in the same period.

PepsiCo’s One-Year Stock Price Performance

PEP shares have underperformed its close competitor The Coca-Cola Company ’s KO gain of 9% in the past year. PEP also lagged other industry peers, including Monster Beverage ’s MNST 5.1% decline and Keurig Dr Pepper ’s KDP 0.7% growth.

The leading beverage company trades below the 50-day and 200-day simple moving averages, indicating a bearish sentiment.

PEP Stock Trades Below 50 & 200-Day Moving Averages

Stable Earnings Estimate Trend for PEP

The Zacks Consensus Estimate for PepsiCo's 2024 EPS was unchanged in the last 30 days. The stable estimate revision trend suggests no significant developments or changes in the company's outlook to prompt analysts to adjust their earnings forecasts. The consensus estimate for 2025 EPS has moved down 0.2% in the past seven days.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

For 2024, the Zacks Consensus Estimate for PEP’s sales and EPS implies 0.7% and 7% year-over-year growth, respectively. The consensus mark for 2025 sales and earnings indicates 3.1% and 5.8% year-over-year increases, respectively.

Analyzing PEP Stock Drop to 52-Week Low

Bearish technical indicators and stagnant estimate revisions have left investors uncertain about PEP’s outlook. PepsiCo has encountered several challenges that have contributed to the decline in its share price in the past year.

PEP’s downside comes from its soft top-line performance trends, impacted by the challenges in its North America operations since early 2024. The North America convenient foods business has faced soft demand, led by higher prices and product recalls in the Quaker Foods North America (“QFNA”) segment. Additionally, revenues reflected business disruptions caused by escalating geopolitical tensions in some international markets.

The company’s aggressive price increases implemented in response to the rising inflation in the past few years have led to lower volumes as consumers adjust their spending habits amid economic pressures. Since 2020, PepsiCo has significantly increased prices, with snacks and beverages rising 41%, outpacing the 25% average increase for grocery items. This gap has triggered consumer pushback, leading to lower sales volumes, especially in the salty snacks and carbonated beverages categories.

Additionally, product recalls in the QFNA segment, related to contamination issues such as Salmonella in various cereal and snack items, have weighed on the overall sales performance. These recalls have weakened the segment's performance, resulting in diminished sales and profits in recent quarters. In the third quarter of 2024, organic sales for the QFNA segment dropped 13% year over year, driven by the effects of the recalls and weaker category demand.

As a result, PEP reported muted revenue growth of 0.6% in the third quarter of 2024, much below the 6.7% rise in the year-ago quarter. Additionally, revenues reflected a sharp slowdown from 0.8% and 2.3% growth in the second and first quarters of 2024, respectively.

Does PEP’s Stock Valuation Discount Signal Trouble?

PepsiCo is currently trading at a forward 12-month P/E ratio of 17.95X, below the industry average of 19.71X and the S&P 500’s average of 22.67X.

Although PEP’s stock valuation is currently lower than that of its industry peers, this gap might not be as advantageous as it appears. The lower price could signal underlying issues rather than presenting a straightforward investment opportunity.

Is PEP’s Stock Dip Still a Buy Opportunity?

Investing in the PepsiCo stock requires a thoughtful strategy, especially given the company’s recent challenges in its North America operations and the broader market environment. Recent market data suggests bleak prospects for near-term recovery in its North America business.

Trading at a discounted P/E, below the industry average, PEP may seem to offer a compelling value. However, its muted estimate revision trend and bearish technical indicators call for a cautious approach for new investors. Potential investors should consider waiting for clearer signs of recovery before investing in this Zacks Rank #4 (Sell) stock.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .

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CocaCola Company (The) (KO) : Free Stock Analysis Report

PepsiCo, Inc. (PEP) : Free Stock Analysis Report

Monster Beverage Corporation (MNST) : Free Stock Analysis Report

Keurig Dr Pepper, Inc (KDP) : Free Stock Analysis Report

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