PepsiCo, Inc. (PEP), the global powerhouse in beverages and convenient foods, is racing against the clock to cleanse its U.S. food lineup of artificial dyes. As the winds of change blow with the “Make America Healthy Again” campaign, PepsiCo has already cleared 60% of its food products of synthetic colors, with favorites like Tostitos and Lay’s set to be fully dye-free by year-end. 

Hot on the heels of this pledge, the Department of Health and Human Services (HHS) and FDA announced plans to eliminate all petroleum-based synthetic dyes, starting with Citrus Red No. 2 and Orange B in coming months and six others by next year. 

Amid this regulatory storm, PepsiCo stock is courting HHS Secretary Robert F. Kennedy Jr., who slammed these dyes as “poisonous compounds” endangering children’s health. Given this policy backdrop, it is worth considering the implications for PEP stock, which is already facing pressure due to tariffs.

About PepsiCo Stock

Based in Purchase, New York, PepsiCo, Inc. (PEP) commands a $184.14 billion market cap and a sprawling portfolio. It delivers everything from dips, cheese-flavored snacks, and chips to cereals, pasta, granola bars, grits, and oatmeal. 

Beyond foods, PepsiCo offers beverage concentrates, ready-to-drink tea, coffee, juices, dairy products, sparkling water makers, and even alcoholic beverages under the Hard MTN Dew brand, catering to a broad range of tastes. Despite its strong brand muscle, PEP stock has faced rough waters, declining 22.9% over the past 52 weeks.

Trading at 16.85 times forward adjusted earnings and 1.99 times sales, PEP carries a premium over its industry peers, but trades at a discount to its own five-year average valuation - making a potential case for long-term investors.

A proud member of the Dividend Kings, PepsiCo has delivered 52 consecutive years of dividend growth. It pays an annualized forward dividend of $5.42 per share, offering a yield of 4.06%. The company made its most recent payment of $1.36 per share on March 31 to shareholders on record as of March 7. 

Pepsi has already announced a 5% increase in its annualized dividend per share starting with the June 2025 payout, setting the stage for what will mark its 53rd consecutive year of dividend hikes.

PepsiCo Beats on Earnings, Warns on Tariffs

On April 24, PepsiCo rolled out its Q1 2025 earnings report, sending ripples across Wall Street. The results were a mixed bag, beating consensus expectations but also revealing cracks beneath the surface. Revenue slipped 1.8% year over year, landing at $17.9 billion, a hair above analysts’ projection of $17.8 billion. 

Operating profit, however, took a steeper dive of 4.9%, settling at $2.6 billion. Adjusted net income did not escape the slowdown either, falling 8.5% to $2 billion. Adjusted EPS dipped 8.1% to $1.48, narrowly edging past Wall Street's call for $1.49.

Once aiming for mid-single-digit growth, PepsiCo now expects core EPS to hold flat against last year’s levels. Blame it on rising tariffs and a tightening consumer wallet; a 25% tariff on imported aluminum is squeezing margins, and with elevated levels of volatility and uncertainty looming large, 2025 looks anything but predictable.

Still, it is not all doom and gloom. PepsiCo is leaning hard into the strength of its international footprint, while North American operations undergo a strategic tune-up. For 2025, the company eyes low-single-digit organic revenue growth, while forecasting core constant currency EPS to remain roughly even year over year. 

Cash returns to shareholders are poised to hit $8.6 billion, split into $7.6 billion in dividends and $1 billion in buybacks.

Looking ahead, for Q2 2025, analysts predict PepsiCo’s EPS to decline 3.5% to $2.20. Even so, there is a silver lining, as EPS could rise 4.8% to $2.42 in the following quarter. For the full fiscal 2025, the company’s EPS is forecasted to drop 3.3% from the prior year to $7.89, reflecting the challenges it faces. 

However, optimism returns on the horizon, with the bottom line expected to jump 9.1% in the next fiscal year to $8.61, signaling a potential rebound.

What Do Analysts Expect for PepsiCo Stock?

Currently, Wall Street’s consensus rating on PepsiCo stands at a “Moderate Buy,” reflecting a market that remains cautiously optimistic. Out of 20 analysts weighing in, seven are firmly backing a “Strong Buy,” 12 are suggesting a “Hold,” and just one is sounding alarm bells with a “Strong Sell” recommendation.

The average price target of $151.63 represents potential upside of 11.8%. Meanwhile the Street-high target of $172 suggests that the stock can climb as much as 26.8% from the current price level. 

All said and done, while PepsiCo’s journey ahead may have a few bumps in the road, the consumer staples standby may prove to be a resilient pick over the longer haul.