Value
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 7.3 |
| P/S | 9.1 |
| EV/EBITDA | 4.9 |
| Fwd P/E | 8.2 |
| PEG | 5.6 |
| Analyst target | 6.0 |
- ▸Forward P/E: 14.5x
- ▸PEG: 1.34
PEP · Why this verdict
Why Pepsico (PEP) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. The TrendMatrix editorial team frequently holds personal long-term positions in securities discussed. We disclose positions held at the time of publication on each piece. We maintain a trading-window policy: we do not initiate or close positions in the same direction as a TrendMatrix publication within 24 hours before or 72 hours after publication.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security. Our sole compensation is subscription revenue.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictSELL
Overall score5.7/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
PepsiCo has beaten earnings estimates in 3 of the last 4 quarters with a 44% ROE and a superior Piotroski F-Score of 7/9, but trades near analyst targets with only 3.7% upside, carries a high debt-to-equity ratio, and faces a sole-source raw material supplier concentration risk.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
PepsiCo generates a 44% return on equity, ranks in the top quartile of consumer staple peers, and has a Piotroski F-Score of 7/9 with 165% free cash flow conversion, reflecting the durable power of its brand portfolio. Quality breakdown | ROE remains above 35% and free cash flow conversion stays above 100% of net income over the next 4 fiscal quarters. | →Stable |
| CounterThe 44% ROE is heavily influenced by significant financial leverage with a D/E ratio that warrants a -1.5 penalty score; stripping out leverage, underlying asset returns are more modest. | ||
PepsiCo beat EPS estimates in 3 of the last 4 quarters, delivering $1.61 versus $1.55 in the most recent quarter, reflecting the reliable earnings execution characteristic of its diversified consumer staple portfolio. Earnings | EPS beats continue in at least 3 of the next 4 quarters, including the upcoming July 2026 report, with positive average surprise. | ↓Deteriorating |
| CounterThe single miss in Q3 2025 was a significant -54.7% surprise, and the average surprise across all 4 quarters is -12.1%, suggesting one bad quarter can substantially distort the picture. | ||
PepsiCo carries significant financial leverage that generates a -1.5 penalty in the valuation model, combined with sole-source raw material supplier dependency that creates operational fragility if input supply chains are disrupted. Bear case | Debt-to-equity ratio declines by at least 15% over the next 2 fiscal years through cash flow-funded deleveraging. | →Stable |
| CounterLarge consumer staples companies routinely carry substantial leverage at low borrowing costs; PepsiCo's investment-grade debt profile allows this leverage to be maintained without meaningful refinancing risk. | ||
With only 3.7% upside to the analyst target of $151.65 and the stock below its 200-day moving average, the risk/reward is unattractive as the potential gain barely exceeds the 4% stop-loss downside. Warnings | Analyst consensus target is revised upward above $162 within 12 months, reopening at least a 10% upside case. | Tripped→Stable |
| CounterPepsiCo is a core defensive holding for institutional investors; even modest earnings beats tend to trigger steady target revisions upward, and the lack of upside at current prices reflects fair value, not overvaluation. | ||
PepsiCo generates a 44% return on equity, ranks in the top quartile of consumer staple peers, and has a Piotroski F-Score of 7/9 with 165% free cash flow conversion, reflecting the durable power of its brand portfolio.
→StableQuality breakdown
- Expectation
- ROE remains above 35% and free cash flow conversion stays above 100% of net income over the next 4 fiscal quarters.
CounterThe 44% ROE is heavily influenced by significant financial leverage with a D/E ratio that warrants a -1.5 penalty score; stripping out leverage, underlying asset returns are more modest.
PepsiCo beat EPS estimates in 3 of the last 4 quarters, delivering $1.61 versus $1.55 in the most recent quarter, reflecting the reliable earnings execution characteristic of its diversified consumer staple portfolio.
↓DeterioratingEarnings
- Expectation
- EPS beats continue in at least 3 of the next 4 quarters, including the upcoming July 2026 report, with positive average surprise.
CounterThe single miss in Q3 2025 was a significant -54.7% surprise, and the average surprise across all 4 quarters is -12.1%, suggesting one bad quarter can substantially distort the picture.
PepsiCo carries significant financial leverage that generates a -1.5 penalty in the valuation model, combined with sole-source raw material supplier dependency that creates operational fragility if input supply chains are disrupted.
→StableBear case
- Expectation
- Debt-to-equity ratio declines by at least 15% over the next 2 fiscal years through cash flow-funded deleveraging.
CounterLarge consumer staples companies routinely carry substantial leverage at low borrowing costs; PepsiCo's investment-grade debt profile allows this leverage to be maintained without meaningful refinancing risk.
With only 3.7% upside to the analyst target of $151.65 and the stock below its 200-day moving average, the risk/reward is unattractive as the potential gain barely exceeds the 4% stop-loss downside.
Tripped→StableWarnings
- Expectation
- Analyst consensus target is revised upward above $162 within 12 months, reopening at least a 10% upside case.
CounterPepsiCo is a core defensive holding for institutional investors; even modest earnings beats tend to trigger steady target revisions upward, and the lack of upside at current prices reflects fair value, not overvaluation.
Per-dimension breakdown
Quality
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 6.0 |
| Gross margin | 6.8 |
| Op margin | 6.7 |
| Net margin | 5.4 |
| Current ratio | 3.7 |
| FCF quality | 5.7 |
| Moat | 6.9 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 52%
- ▸Earnings quality warning: 75% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
7.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.1 |
| EPS growth | 10.0 |
Momentum
1.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 1.5 |
| Volume | 0.0 |
- ▸Capitulation risk (RSI 20, below 200MA)
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope flat
Sentiment
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.8 |
| Analyst rating | 5.0 |
| Price target | 7.4 |
- ▸LLM news sentiment: +0.35 (n=3)
Insider
5.3/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.6 |
- ▸Negligible insider selling — $404,674 (0.000% of mkt cap)
Peer rank
4.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.5 |
| quality rank | 7.3 |
| growth rank | 2.5 |
- ▸Superior ROE vs peers
Technical
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.6 |
| support resistance | 8.0 |
| 52w position | 5.7 |
Risk (lower is worse)
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.1 |
| days to cover | 7.6 |
| volatility | 8.7 |
| put call | 5.6 |
| implied vol | 7.3 |
| max pain risk | 3.0 |
| beta | 10.0 |
| debt equity | 2.6 |
- ▸Above max pain $75
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 3.2 |
| dividend safety | 4.8 |
| news activity | 7.0 |
- ▸Strong earnings: 3B/0M
- ▸Earnings in 14 days
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:1.1<4.5
- ASYMMETRY:1.1<1.5@spot
- DEATH_CROSS:HARD_BLOCK
Warning (1)
- EARNINGS_PROXIMITY:14d<=14d (soft)
Reward-to-Risk
1.06
Upside
+5.3%
Downside
5.0%
Sizing output
AVOID
SetupFalling Knife — Death cross, below all MAs, RSI 20, MACD bearish
EdgeCatalyst-Driven — Earnings in 14d with 3/4 beat streak
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.0 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Technical at 7.4) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:1.1<4.5, ASYMMETRY:1.1<1.5@spot, DEATH_CROSS:HARD_BLOCK) reinforce the read. Current asymmetry R:R is 1.06 — supplementary context, not the trigger for this path.
The strongest dimensions are Technical at 7.4, Growth at 7.0, and Value at 6.8; the weakest are Momentum at 1.1, Peer rank at 4.1, and Insider at 5.3. The V9 engine flagged 3 failed gates with 1 warning, producing an asymmetric reward-to-risk of 1.06 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Earnings Consistency Consumer Staple
Trip ifEPS falls below $1.40 per quarter for 2 consecutive quarters, declining more than 10% below the recent $1.55-$1.61 quarterly delivery range.
- P2High Roe Brand Quality
Trip ifROE falls below 30% for 2 consecutive reported quarters, indicating erosion of brand-driven capital efficiency.
- P3Leverage Supplier Concentration
Trip ifDebt-to-equity ratio rises above current levels by more than 20% in the next annual report, indicating further leverage expansion.
- P4Limited Upside Near TargetTripped
Trip ifStock price falls below $138, declining more than 5% below current levels and breaching multi-month support.