Pepsi Stock Too Cold?
- PepsiCo stock performance has been stagnant recently.
- The stock has returned roughly 33% over the last five years.
- Investors may need to reevaluate their positions in PepsiCo.
Recent analysis suggests that investors may want to consider alternatives to PepsiCo, particularly Phillip Morris (PM) and Keurig Dr Pepper (KDP), which have demonstrated superior revenue growth and operating margin improvements over the past year. Both companies not only outperform PepsiCo in these metrics but are also available at a lower price point, making them attractive options for investors seeking better returns. Despite PepsiCo's attempts to bolster its margins through price increases, the company has struggled with declining volumes. In contrast, PM and KDP have shown robust performance, with PM achieving a year-to-date return exceeding 24% and KDP at 7%. This trend indicates a potential shift in market favor towards these companies, as evidenced by their recent stock performance compared to PepsiCo. Data reveals that PM has consistently outperformed PepsiCo over various time frames, with returns of 19.7%, 34.3%, and 32.6% over the last 3, 6, and 12 months, respectively. In stark contrast, PepsiCo's returns have been lackluster, showing declines and minimal growth during the same periods. This disparity raises questions about PepsiCo's future, particularly regarding its higher valuation coupled with lower growth prospects. As the market continues to reward stronger performers, investors may find it prudent to reassess their portfolios and consider reallocating funds towards PM and KDP, which appear poised for continued success in the competitive beverage landscape.