PepsiCo (NASDAQ: PEP) stock rarely lands in the “discount” category, but it appears that the current price offers a fair buying opportunity for long-term investors. Although the stock is down about 9% from its 2023 peak—just shy of official correction territory—valuation metrics and a solid dividend yield suggest now may be an opportune moment to consider adding PepsiCo to your portfolio.
What Does PepsiCo Offer?
While PepsiCo is best known for its iconic Pepsi soda, the company’s reach extends far beyond beverages. Its portfolio includes sports drinks, teas, protein drinks, and more. But it’s not just a beverage giant—PepsiCo owns Frito-Lay, the leading name in salty snacks. In addition to chips like Tostitos and Sun Chips, PepsiCo offers popcorn, pretzels, and more, making it the No. 1 player in the snack industry, while ranking second in the soda market behind Coca-Cola.
PepsiCo’s influence also extends to the food industry through brands like Quaker Oats, Near East, and Pasta Roni. While it’s not as dominant in packaged foods, its strong relationships with grocery stores help solidify its standing as a top-tier player in the consumer staples sector.
The company’s massive scale, strong brand presence, and extensive distribution network make it an essential partner for retailers. This gives PepsiCo a competitive edge and allows it to continue consolidating its industry position by acquiring and integrating new brands into its operations.
Is PepsiCo a Buy Right Now?
With PepsiCo stock trading about 9% below its 2023 highs, some investors may view the current price as an opportunity to start building a position. While a 25% decline isn’t unheard of for the stock, this dip presents a chance to buy a high-quality company at a reasonable price.
Currently, PepsiCo’s dividend yield stands at around 2.9%, which is on the higher end of its historical range. The company has increased its dividend for 52 consecutive years, earning its status as a Dividend King. By using the dividend yield as a rough indicator of valuation, PepsiCo appears to be “on sale.”
Additionally, traditional valuation metrics such as the price-to-sales, price-to-earnings, price-to-book, and price-to-cash-flow ratios are all below their five-year averages, suggesting the stock is fairly priced or slightly undervalued.
A Fair Price for a Strong Company While PepsiCo may not be a “screaming buy” at the moment, it offers a compelling value for long-term investors seeking exposure to a diversified consumer staples business. With a solid dividend yield well above the S&P 500 average of 1.3%, PepsiCo provides an attractive income opportunity. And if the stock experiences a deeper decline, it could be an even better chance to buy into this well-managed company at a discount.
Before you invest, it’s worth noting that other top stocks have been identified by analysts with potentially higher returns, but PepsiCo remains a solid option for those seeking stability and growth over the long term.
