Shares of beverage giant PepsiCo (PEP) are falling in pre-market trading despite beating fiscal fourth-quarter expectations. Adjusted earnings per share (EPS) of $2.26 surpassed the consensus of $2.24. Sales jumped 5.6% year-over-year to $29.34 billion, also outpacing the consensus of $28.97 billion. The company attributed the strong performance to a 2.1% jump in organic revenue.
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Pepsi’s Outlook and Strategy
Pepsi also reaffirmed its 2026 outlook from December. It expects organic revenue to grow 2%-4% and core earnings per share (in constant currency) to rise between 4% and 6%. Pepsi also announced that it will be slashing prices of snacks like Lay’s and Cheetos by up to 15% to boost sales. The company is under pressure from activist investor Elliott Investment Management to boost performance and enhance shareholder value.
Furthermore, the Dividend King increased its annualized dividend by 4%, reaching $5.92 per share. The current dividend yield stands at 3.91%, above the sector average. PepsiCo also announced a new share buyback plan of up to $10 billion through February 28, 2030.
Is PepsiCo a Buy or Sell?
Ahead of the results, analysts remain divided on Pepsi’s long-term outlook. On TipRanks, Pepsi has a Strong Buy consensus rating based on seven Buys and eight Hold ratings. The average PepsiCo price target of $161.85 implies 4.3% upside potential from current levels. Over the past year, PEP stock gained 3.3%.
