PepsiCo (PEP) shares have fallen about 20% since early 2024, while Coca-Cola has risen 57%. The stock is now 30% below its all-time high and trades at 17 times trailing-12-month earnings, its cheapest in about six years. The main problem is North America: price increases pushed back consumers, obesity drugs such as Wegovy and Zepbound added pressure, and North American beverage volume fell 2% year over year in Q3 2026. An activist investor has taken a $4 billion stake, and Elliott Management is cited as favoring price cuts and a slimmer U.S. product line. Analysts estimate roughly 4% annual earnings growth over the next three to five years, versus 8% for Coca-Cola. The author argues the low valuation provides a margin of safety, noting PepsiCo still plans $8.9 billion in dividends and buybacks in 2026, a 4.3% yield, and 54 consecutive annual dividend increases.
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