Is PEP a good stock to buy? We came across a bullish thesis on PepsiCo, Inc. on Grillo Insights’s Substack by Eric García. In this article, we will summarize the bulls’ thesis on PEP. PepsiCo, Inc.’s share was trading at $154.85 as of April 15th. PEP’s trailing and forward P/E were 25.95 and 18.05 respectively according to Yahoo Finance.
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PepsiCo, Inc. engages in the manufacture, marketing, distribution, and sale of various beverages and convenient foods worldwide. PEP is emerging from a period of subdued growth with clear signs of an operational and financial inflection, supported by improving fundamentals and underappreciated strategic levers. After starting fiscal 2025 with a 2% revenue decline, the company exited the year with 5.6% growth in Q4, alongside a 140 basis point expansion in core operating margin and 16% EPS growth, signaling that recovery is already underway rather than hypothetical.
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A key driver is productivity, with PepsiCo doubling gross productivity between 2021 and 2025 through factory optimization, digitalization, and data infrastructure, positioning it to exceed margin targets while reinvesting in growth initiatives such as AI-driven marketing, automated ordering, and advanced supply chain tools. North America, its largest segment at $56 billion in revenue and 18% margins, is central to the 2026 thesis, where pricing reinvestments and brand relaunches across major products aim to restore volume growth and penetration, supported by large-scale marketing catalysts like FIFA sponsorships.
Internationally, PepsiCo continues to deliver strong growth and margin expansion, benefiting from significant untapped per capita consumption across emerging markets. Additionally, the underdeveloped away-from-home channel represents a meaningful long-term upside opportunity through new consumption formats.
Financially, the company targets mid-single digit organic growth, margin expansion, and high single-digit EPS growth, alongside a 54-year dividend growth track record and improving free cash flow conversion դեպի ~90% by 2027. With multiple catalysts aligned, PepsiCo offers a compelling risk/reward as execution improves.
Previously, we covered a bullish thesis on PepsiCo, Inc. (PEP) by Kroker Equity Research in October 2024, which highlighted strong pricing power, resilient cash flows, dividend consistency, and valuation upside. PEP’s stock price has depreciated by approximately 11.41% since our coverage. Eric García shares a similar view but emphasizes on operational inflection, productivity-driven margins, and recovery catalysts.
PepsiCo, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 74 hedge fund portfolios held PEP at the end of the fourth quarter which was 68 in the previous quarter. While we acknowledge the risk and potential of PEP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PEP and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
