PepsiCo, Inc. (PEP) Stock Valuation — PE Analysis
Beverages - Non-Alcoholic · NASDAQ
Current Price
$144.27
PE Ratio (TTM)
22.6x
Intrinsic Value
$144.98
+0.5% margin of safety
COMPETITIVE MOAT
↑Powerful Brand Recognition
PepsiCo's iconic brands like Pepsi, Lay's, and Gatorade possess immense global recognition. This strong brand equity drives consumer preference and allows for premium pricing power.
↑Extensive Distribution Network
The company boasts a vast and efficient global distribution system. This network ensures widespread product availability, creating a significant barrier to entry for smaller competitors.
↑Diversified Product Portfolio
PepsiCo's presence in both beverages and snacks mitigates risk. This diversification provides resilience against sector-specific downturns and appeals to a broader consumer base.
INVESTMENT RISKS
↓Intense Competition
The beverage and snack industries are highly competitive, with constant pressure from rivals like Coca-Cola and numerous smaller players. This can impact market share and pricing.
↓Changing Consumer Preferences
Shifting consumer tastes towards healthier options and away from sugary drinks pose a threat. PepsiCo must continually innovate and adapt its product offerings.
↓Supply Chain Disruptions
Global supply chain issues, including ingredient sourcing and transportation, can impact production costs and product availability. This can affect profitability and customer satisfaction.
Base case
PEP base case PE valuation
A base case PE valuation for PEP estimates a fair value of about $144.98 per share, against a current price of $144.27. The model assumes 5.1% annual earnings growth, a 23x target PE multiple, and a 10% discount rate.
Intrinsic Value
$144.98
Margin of safety
+0.5%
Expected annual return
+0.1%
Base case assumptions: 5.1% annual earnings growth, 23x target PE, 10% discount rate, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the PEP PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for PepsiCo, Inc. respond.
Open PE Calculator for PEPCompany Overview
PepsiCo, Inc. is a global enterprise that creates, promotes, and supplies a diverse array of drinks and easy-to-prepare food items across the globe. Its operations are structured into seven primary divisions: Frito-Lay North America, Quaker Foods North America, PepsiCo Beverages North America, Latin America, Europe, Africa/Middle East/South Asia, and the Asia Pacific, Australia, New Zealand, and China Region. The company's extensive product catalog encompasses popular snack foods like various dips, cheese snacks, spreads, and a range of chips (including corn, potato, and tortilla varieties). Its pantry staples feature cereals, rice, pasta, baking mixes, beverage syrups, granola bars, grits, oatmeal, rice cakes, and ready-made side dishes. In the beverage sector, PepsiCo offers concentrated syrups, fountain beverages, pre-packaged drinks, ready-to-consume teas, coffees, fruit juices, dairy-based items, and home carbonation systems with associated goods. PepsiCo reaches its broad clientele, which includes wholesale partners, food service providers, various retail outlets like supermarkets, pharmacies, convenience shops, discount stores, large-format retailers, membership-based stores, hard discount retailers, online merchants, and approved independent bottlers. This widespread distribution is achieved via direct store delivery, customer warehouse systems, and comprehensive distributor networks, along with direct sales to consumers through digital commerce channels and retail partners. Established in 1898, the corporation maintains its principal office in Purchase, New York.
Financial Metrics — PEP PE Stock Valuation Data
PE Ratio (TTM)
22.6x
PEG Ratio
n/m
Earnings Yield
4.43%
ROE (TTM)
43.9%
Revenue/Share (TTM)
$69.82
Dividend Yield
3.98%
Debt/Equity
2.47x
Frequently Asked Questions
What is the PE ratio of PEP?
The trailing twelve-month PE ratio of PEP reflects how much investors pay per dollar of PepsiCo, Inc.'s earnings. This metric is most useful when compared to Beverages - Non-Alcoholic peers and the company's own historical range.
Is PEP overvalued based on PE ratio?
PEP's PE of 22.6x combined with a PEG ratio of -3.50 provides a growth-adjusted perspective. PEP has negative earnings, so its PE and PEG ratios are not meaningful here and cannot tell you whether the stock is over or undervalued. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Beverages - Non-Alcoholic, a DCF analysis may be more appropriate.
How do I value PEP stock using PE ratio?
To value PepsiCo, Inc. using PE: (1) Compare the current PE (22.6x) against the Beverages - Non-Alcoholic median to assess relative pricing, (2) check the PEG ratio (-3.50) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of PEP?
PEP's PEG ratio is -3.50, calculated by dividing the PE ratio (22.6x) by the expected earnings growth rate. Because PEP has negative earnings, its PEG ratio is not meaningful and should not be read as a sign of under or overvaluation. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for PEP stock valuation?
PE ratio gives a quick relative read — how PEP is priced versus Beverages - Non-Alcoholic peers. DCF provides an absolute value based on projected free cash flows. For PEP, with a strong ROE of 43.9%, both methods are worth using — PE for a market-relative check, DCF to stress-test whether fundamentals justify the price. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See PEP DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Consumer Defensive valuationsP/E and DCF value PEP with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.