On the positive side, revenue growth remains robust and operating margins continue to impress. However, this definitely contrasts with the rest of the consumer staples sector, which is grappling with structural stagnation upstream in terms of sales and has been hit hard by inflation downstream at the operating profit level.

Q1 results for the current fiscal year provided some reassurance following a 2025 that was marked by mixed signals.

A star amongst American "dividend aristocrats", PepsiCo has once again increased its distribution over the 12-month period, continuing a long-standing annual tradition. However, in the past we noted that these capital returns to shareholders have recently tended to exceed the free cash flow generated by operations.

This trend was confirmed in 2025, with cash profit of $8.2bn falling short of the combined $7.6bn in dividends and $1.1bn in share buybacks. In this respect, the $3.3bn invested in acquisitions resulted in net debt increasing by a further $5bn.

This dynamic was accompanied by a decline in volumes, which nevertheless moderated over Q1 2026 thanks to growth in the food segment and a return to equilibrium in the beverage segment. Meanwhile, margins remain significantly higher than the industry average.

Regarding valuation, pressure has eased slightly compared to the same period last year, when the dividend yield surpassed 4%—a level not seen in twenty years. Based on multiples of equity and operating income, PepsiCo remains valued near its 10-year lows, yet it is still far from providing a clearly evident buy signal.