PepsiCo Inc. (NASDAQ: PEP) stock is down 5.89% in 2025 and 19.5% over the last 12 months, reflecting challenges in the consumer staples sector. GLP-1 drugs are impacting demand for soft drinks and snacks, contributing to PEP’s underperformance. Despite a growing dividend yield of 4.02%, the stock’s total return is negative 9.1%.

Investors are concerned about Pepsi’s earnings, with a 7% year-over-year decline in EPS. Elliott Investment Management’s $4 billion stake in Pepsi aims to push for margin improvements by potentially selling low-margin brands. Pepsi’s revenue has remained relatively stable, but pressures on margins persist, especially with competition from store brands.

Debates on interest rate cuts may affect consumer staples like Pepsi, potentially boosting topline growth but impacting margins due to inflation. PEP stock is trading at a discount to historical averages, with a reasonable valuation. While concerns exist over the payout ratio, dividends seem well covered by free cash flow, providing some reassurance for investors.

Read more at Nasdaq: Why Rate Cuts May Not Put the Fizz Back in Pepsi’s Stock