What's Wrong With PepsiCo Stock?

The past five years have been great for the stock market. The S&P 500 index, which is a collection of the leading stocks on U.S. markets, has risen by around 70% during that stretch. Top beverage and snack company, PepsiCo (NASDAQ:PEP), hasn't unfortunately been nearly as good an investment. In fact, it's down 12% over that same time frame.

The company is still massive, generating close to $100 billion in annual revenue, and its business is producing some solid profits as well. So what's wrong with the beverage stock, and could PepsiCo make for a good contrarian buy right now?

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Why has the market become bearish on PepsiCo?

What's a bit surprising is how different PepsiCo's stock trajectory has been compared with not only the broader market but also its key rival, Coca-Cola. Shares of Coca-Cola have risen by 55% in five years, and this is even though its growth rate has been fairly comparable to PepsiCo's.

PEP Revenue (Quarterly YoY Growth) data by YCharts

PepsiCo also has a large portion of its business centered on snacks, which likely makes it a riskier option in the eyes of many investors due to concerns that GLP-1 drugs are curbing appetites and may result in lower demand for the company's products.

But even with GLP-1 drugs being available for multiple years now, PepsiCo's business hasn't exactly fallen off a cliff. Its financials remain sound, which suggests that the market may be overreacting a bit.

Has PepsiCo stock become a bargain buy?

PepsiCo's stock hasn't been able to win over investors this year, as it's still down around 4% thus far for 2026. The stock is trading at a fairly attractive valuation, as its price-to-earnings multiple is just 18 -- well below the 27 times earnings that Coca-Cola trades at, and below the S&P 500 average of 24.

There's good value here for investors who are willing to give PepsiCo's stock a chance. While its growth may not be in double digits, the business is still showing good, decent gains, even at a time when consumers are supposedly cutting back and eating less. The narrative of GLP-1 crippling demand for salty snacks may have resulted in a poor performance for the stock, but its fundamentals suggest the business is more than fine.

For long-term investors, PepsiCo stock may prove to be an underrated buy right now as its solid numbers and attractive valuation could enable it to outperform the market and its key rival from here on out.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.