PepsiCo Earnings: Despite International Strength, 2025 Outlook Disappoints on US Weakness

Wide-moat PepsiCo posted 2024 results that met our expectations, but it issued a disappointing 2025 outlook calling for low-single-digit increases in both organic sales and adjusted EPS, below our 5% growth forecasts for both. We think the weak guidance was likely driven by continued sluggish demand in savory snacks and beverages in the US amid consumer belt-tightening and plan to lower our 2025 estimates, but we see no need to change our 10-year forecasts for 4% annual sales growth and a 16% average operating margin. Our $174 per share fair value estimate will likely fall by a low-single-digit percentage, but the stock remains attractive.