PepsiCo (PEP) Valuation in Focus Following Activist Stake and Strategic Brand Expansion Moves

If you’re wondering what’s next for PepsiCo (PEP), you’re not alone. The stock is in the spotlight after Elliott Investment Management unveiled a $4 billion stake, about 2% ownership, sparking conversations on possible changes at the company. With an activist seat at the table and a pending acquisition of Poppi signaling fresh moves into prebiotic sodas, PepsiCo is making headlines at a time when stability and strategic pivots matter more than ever.

Even with increased investor attention, PepsiCo’s share price has slid nearly 6% since the start of the year, reflecting lackluster earnings growth and muted momentum. The past month saw a dip, but the past three months tell a more optimistic story, with shares regaining some ground. Alongside these price swings, PepsiCo has kept its dividend machine humming, distributing payouts for 53 consecutive years. This track record continues to attract income-focused investors despite the market’s mixed sentiment.

With new strategic priorities, activist involvement, and a dividend legacy, is this recent price weakness a window of opportunity, or is the market already looking ahead and pricing in future growth from PepsiCo’s evolving playbook?

Most Popular Narrative: 12.1% Undervalued

According to Serpentaire, PepsiCo appears attractively priced relative to its fair value, with the potential for meaningful upside. The narrative points to a combination of steady growth, robust strategy shifts, and global expansion plans that could fuel future returns.

PepsiCo is more capable than other companies, such as Monster Beverages or Coca-Cola, of offering healthier and more diversified products. Investments in the Indian and Vietnamese markets could benefit the company in the medium to long term. I would say that PepsiCo stands out as one of the most robust and interesting companies in the consumer goods sector, to my knowledge, and compared to its peers. We need to monitor its future progress and whether it succeeds in meeting its commitments.

Want to uncover the real reason behind this undervaluation? The secret lies in numbers that suggest long-term profit and international expansion, coupled with a bold future profit multiple strategy. Curious which financial assumptions are powering this fair value prediction? Get ready for a closer look at the narrative’s growth playbook.

Result: Fair Value of $160.43 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, slower international expansion or underwhelming results from new product launches could challenge the optimistic outlook that investors have for PepsiCo’s future growth.

Find out about the key risks to this PepsiCo narrative.

Another View: Sizing Up a Different Yardstick

While fair value models point to PepsiCo being undervalued, a look through our DCF model offers further support for this thesis. The DCF approach also suggests the market may be missing some potential. However, it is possible that reality could differ from both outlooks.

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding PepsiCo to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own PepsiCo Narrative

If you see the story playing out differently, or want to test your own insights against the data, you can craft your own perspective in just a few minutes. Do it your way.

A great starting point for your PepsiCo research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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