PepsiCo (NASDAQ:PEP) has spent close to a year going nowhere while the broader market climbed steadily, and shares recently traded near a 52-week low even after the company posted higher revenue and earnings. That gap between decent headline numbers and a beaten-down stock price is the whole story right now. Investors are trying to figure out whether a business that looks strong overseas and stuck at home is worth paying up for, all while collecting one of the most dependable dividends around.
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A Turnaround Built On Volume And Overseas Strength
Outside the United States, PepsiCo’s business is humming. International beverage volume climbed 5% last quarter and revenue jumped 11%, or 9% once currency swings are stripped out, and none of that came from acquisitions since those deals were concentrated on U.S. brands. Snacks told a similar story abroad, with Asia Pacific revenue up 15% and Latin America up 12%. That geographic spread matters because it’s cushioning a domestic business that isn’t pulling its weight. On top of that, volume is finally moving in the right direction everywhere: PepsiCo posted its fastest volume sales growth since 2022, and global organic sales volume through the first half of fiscal 2026 was the highest in four years, a sign that recent price cuts aimed at cost-conscious shoppers are working rather than just squeezing margins.
The stock’s price tag adds to the case. Shares trade around 16 times forward earnings, a discount to its five-year median near 22. Layer on a dividend that’s been raised for 54 straight years, with the payout still covered by adjusted earnings. Management is “restaging” four core brands, Lay’s, Tostitos, Gatorade, and Quaker, with new packaging, marketing, and ingredients, while rolling out products like protein chips and probiotic drinks. Activist investor Elliott Investment Management has also been in the mix, pushing the company to move faster on growth and cost cuts.
The North American Slog Investors Can’t Ignore
The trouble is that PepsiCo’s biggest market is still shrinking in the ways that matter. North American food sales fell 2% last quarter, and beverage volume in that region dropped 4% even as reported beverage revenue ticked up. Management pointed to higher gas prices as one culprit, arguing that pricier fill-ups are cutting into convenience store traffic, a channel where impulse buys of chips and soda matter a lot. Strip out acquisitions, and organic growth in North American beverages was just 1%.
There’s a structural worry underneath that too. In 2025, PepsiCo’s 2% revenue growth was almost entirely a pricing story, with price adding 4 points while volume actually subtracted 2, not a mix that can keep working indefinitely. Adjusted earnings per share of $2.20 last quarter also came in a penny short of estimates. Meanwhile, that appealing dividend yield of 4.3% owes a lot to a falling share price rather than to unusually generous raises, and a 68.75% payout ratio leaves less room to keep hiking briskly. There’s also a longer arc worth watching: PepsiCo remains closely tied to salty snacks and full-sugar soda just as consumers keep drifting toward healthier options.
Why the Market is Paying Up for Coca-Cola and Not PepsiCo
Hedge fund ownership slipped from 74 funds to 72 in Q1 2026 for PepsiCo, while Coca-Cola’s (NYSE:KO) hedge fund count dropped to 76 from 87. Short interest is low for both: 2.66% of PepsiCo’s float against 1.12% for Coca-Cola, too thin to signal real conviction either way. The bigger gap is valuation: Coca-Cola trades at 26.5 times forward earnings, higher than the market’s multiple, while PepsiCo sits at just 16.3.
That split traces back to two different stories. Coca-Cola’s asset-light model, with bottling and distribution outsourced, plus strong pricing power, have kept results steady enough to earn a premium. PepsiCo’s cheaper multiple instead reflects worries about its slowing North American business and its recent leaning on price hikes rather than volume growth, in addition to its capital intensive business model which requires heavy investment in manufacturing, warehousing, and logistics for its snack and food divisions.
The Takeaway
PepsiCo’s overseas growth and improving volume trends give it real momentum to build on, and a covered dividend offers a cushion while that plays out. But North America keeps sliding, and last year’s growth formula leaned too hard on price increases to be repeated indefinitely. Whether the international strength and brand refresh eventually lift the U.S. business, or whether gas prices and shifting tastes keep weighing on it, is the open question. The next few quarters of North American numbers should go a long way toward answering it.
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