PepsiCo stock jumps after strong earnings report

In the United States, PepsiCo's stock experienced a notable increase of 7% on July 17, 2025. This surge followed the company's announcement of its robust second-quarter earnings, which showcased substantial financial performance despite slight revenue declines over the past year. Investors are increasingly viewing PepsiCo as a more attractive investment relative to its competitor, Coca-Cola, due to its lower valuation. A thorough analysis of PepsiCo's current valuation, operational performance, and financial health supports this view. Comparatively, PepsiCo's financial metrics indicate it has a price-to-sales (P/S) ratio of 2.0, which is significantly lower than the S&P 500's average of 3.1. Despite a recent decrease in its revenues by 0.3% to $92 billion over the last 12 months, quarterly revenues showed improvement, increasing 1% to $22.7 billion year-over-year. This suggests a promising recovery trajectory for PepsiCo's operational growth. PepsiCo's cost management and operational processes have drawn scrutiny given its operating income over the last four quarters amounted to $11 billion, reflecting an operating margin of only 11.5%. The company has also faced challenges with its net income margin sitting at 8.2%, lower than the S&P 500's average. However, investors remain optimistic about future developments given PepsiCo's commitment to enhancing its performance in North America and strengthening its market position.<br> Furthermore, PepsiCo's balance sheet remains healthy, with total debt recorded at $51 billion and a market capitalization of $200 billion. This translates to a moderate debt-to-equity ratio of 25.8%, which remains manageable within industry standards. The stock has shown resilience in past downturns, suggesting that despite the challenges, PepsiCo retains a strong position capable of recovering from market fluctuations. The outlook for the stock remains favorable as it trades significantly below its historical price-to-earnings (P/E) ratios, providing investors with a potentially attractive entry point as they consider a longer investment horizon.