PepsiCo, Inc. (PEP) Stock Valuation — PE Analysis
Beverages - Non-Alcoholic · NASDAQ
Current Price
$123.73
PE Ratio (TTM)
16.2x
Intrinsic Value
$125.8
+1.6% margin of safety
COMPETITIVE MOAT
↑Powerful Brand Recognition
PepsiCo's iconic brands like Pepsi, Lay's, and Gatorade possess strong consumer loyalty. This allows for premium pricing and consistent demand across diverse product categories.
↑Extensive Distribution Network
A vast and efficient global distribution system ensures widespread product availability. This creates significant barriers to entry for smaller competitors seeking similar reach.
↑Economies of Scale
Massive production volumes lead to lower per-unit costs in manufacturing and procurement. This cost advantage is difficult for rivals to replicate, enhancing profitability.
INVESTMENT RISKS
↓Regulatory Scrutiny on Health
Increased government regulations and taxes on sugary beverages could impact sales volumes and profitability. This may necessitate costly product adjustments.
↓Supply Chain Disruptions
Global supply chain volatility, including ingredient sourcing and transportation, can affect production costs and product availability. This poses a risk to consistent delivery.
↓Dependence on Key Markets
Over-reliance on specific geographic regions for a substantial portion of revenue creates vulnerability. Economic downturns or political instability in these areas could have a significant impact.
Base case
PEP base case PE valuation
At a current price of $123.73, the base case PE valuation puts PEP fair value near $125.8 per share. That figure assumes 4.1% yearly earnings growth, a target PE multiple of 16.39x, and a 10% discount rate.
Intrinsic Value
$125.8
Margin of safety
+1.6%
Expected annual return
+0.3%
Base case assumptions: 4.1% annual earnings growth, 16.39x target PE, 10% discount rate, 5 year projection. Data as of 2026-10-07.
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)
16.2x
PEG Ratio
0.42
Earnings Yield
6.11%
ROE (TTM)
50.4%
Revenue/Share (TTM)
$70.94
Dividend Yield
4.69%
Debt/Equity
2.41x
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 16.2x combined with a PEG ratio of 0.42 provides a growth-adjusted perspective. A PEG below 1.0 means the P/E is low relative to the earnings growth rate. 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 (16.2x) against the Beverages - Non-Alcoholic median to assess relative pricing, (2) check the PEG ratio (0.42) 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 0.42, calculated by dividing the PE ratio (16.2x) by the expected earnings growth rate. A PEG below 1.0 means the P/E is low relative to the expected earnings growth rate. 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 50.4%, 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 2026-10-07. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.