PEP Analysis: PepsiCo's $226 Billion Snack-and-Sip Empire Rallies 29% Off Its Lows — But a Stretched Payout Ratio and Tariff Risks Cloud the Path to $171
PepsiCo (NASDAQ: PEP) has staged a remarkable recovery. After plunging to a 52-week low of $127.60 amid consumer spending worries and volume declines across its Frito-Lay division, the stock has surged 29% to trade at $164.94 — within 4% of its 52-week high of $171.48. The $226 billion beverage and snack food giant just reported fiscal 2025 results, and the picture is more nuanced than the rally suggests. Full-year revenue came in at roughly $93.9 billion across four quarters, with diluted EPS of $6.00. The company generated $12.1 billion in operating cash flow and $7.7 billion in free cash flow — numbers that underpin PepsiCo's status as a Dividend King with 54 consecutive annual dividend increases. At 27.5x trailing earnings, the stock commands a premium that demands scrutiny. The question for investors now is straightforward: after a 29% run, does PepsiCo still offer value, or has the easy money been made? With a new 10% global tariff regime taking shape and PepsiCo's significant international exposure, the answer depends on whether this cash flow machine can sustain its dividend growth while navigating rising input costs and shifting consumer preferences.