PEP

The stock has not been priced this richly against its own sales at any point in a decade, and part of the earnings growth that price pays for comes from an exchange-rate swing rather than from the operation. Coca-Cola (KO) closed at $88.82 on Aug 18, 2026, effectively at its 52-week high after a 30.6% total return over the past year. Nothing in the operation is breaking, which is what makes the risk here hard to see. The price now pays for peak profitability, and the most recent step up in earnings growth came partly from outside the operation. The company's $50.1 billion of revenue over the trailing twelve months is priced at 7.6 times sales. That multiple has run between 4.3 and 7.1 over the past decade, so the stock is now above the top of its own ten-year range. The stretch is measured against its own history, not against any peer. A price set there is not asking the business to accelerate; it is asking it not to stumble. Net margin over the trailing twelve months is 28.6%, the highest in at least five years and well above its 24.9% three-year average. Management attributes the comparable operating margin expansion in Q2 2026 to underlying expansion and currency tailwinds together. The company's full-year 2026 guide carries an approximate 3-point currency tailwind inside comparable earnings per share growth of 9% to 10%. Foreign exchange ran the other way for years before it turned. Earnings growth built in the operation and earnings growth handed over by an exchange rate are not the same asset, a distinction the Trefis High Quality Portfolio makes when it looks for strong margins alongside sustainable revenue growth in its holdings. Worldwide unit case volume grew 5% in Q2 2026, and the company names what made the quarter run hot: an easier prior-year comparison, favorable weather in certain markets, and a FIFA World Cup activation that helped carry Trademark Coca-Cola to its strongest volume growth in 17 years, excluding the pandemic recovery. On a two-year average, that worldwide volume line runs 2%. Adding new drinkers costs something: comparable operating income in Asia Pacific declined in Q2 2026 even as volume grew across all of its operating units, and management puts that decline down to widening the consumer base across income levels, an effort that includes affordability initiatives and cold drink equipment. Volume built for the long term is being paid for out of segment profit. Management guides 2026 organic revenue growth to about 5%, below the 6% organic growth reported for Q2 2026, and says the second half of 2026 cycles a higher comparison, with six fewer days in the fourth quarter. The deceleration is scheduled, not the risk. What is unsettled is whether it arrives with mix improving or with more investment behind it. None of this describes a company in trouble; it describes a stock the market has barely marked down at any point in the past year, when the deepest peak-to-trough drop reached just 7.9%. How wide a range the options market is pricing over the next twelve months is the cheapest read on whether anyone else is worried yet. The risks here are not existential; they sit in one multiple, one margin cycle and one investment cycle, and a holder owns all three. Spreading that defensive intent across the Trefis High Quality Portfolio is a different exposure from paying the top of a decade-long range on sales for one franchise. That portfolio has a track record of outpacing the three major indices - the S&P 500, S&P Mid-cap, and Russell 2000.

Coca-Cola KO) and PepsiCo PEP) have long been staples for investors seeking exposure to some of the world's most recognizable consumer brands. Both beverage giants also offer dependable dividends and defensive characteristics that can make their stocks attractive when economic uncertainty rises. However, their latest quarterly results suggest there is a widening gap between the two companies' near-term operating outlooks. Coca-Cola delivered an impressive second-quarter performance and raised its full-year guidance, supported by healthy global demand, improving margins and continued momentum across its portfolio. PepsiCo also topped Q2 expectations, but softer trends in North America remain a concern and management maintained a more modest growth outlook. With Q2 results from both companies now in hand, let's take a closer look at whether Coca-Cola stock is the better choice for continued upside or if PepsiCo offers more compelling rebound potential. Image Source: Zacks Investment Research Coca-Cola's Q2 results gave investors plenty to like. Net revenue increased 7% year over year to $13.37 billion and topped Q2 estimates of $13.05 billion while organic revenues advanced 6%. Furthermore, Q2 adjusted net income came in at $4.18 billion and translated to earnings of $0.97 per share, up 11% YoY and ahead of EPS expectations of $0.92. Importantly, Coca-Cola's growth wasn't solely a product of higher pricing. Global unit case volume increased a healthy 5%, complemented by a 2% benefit from price/mix. Regarding Coca-Cola's increased profitability, its comparable operating margin expanded to 35.6% from 34.7% in the year-ago quarter. The combination of higher volumes, expanding margins and double-digit adjusted earnings growth paints an encouraging picture of Coca-Cola's underlying business. Coca-Cola also continued to gain value share in the total nonalcoholic ready-to-drink beverage category, underscoring the strength of its brand portfolio even as consumers remain selective with their spending. Perhaps most encouraging for investors was Coca-Cola's increased confidence in the remainder of 2026. Following Q2, Coca-Cola raised its organic revenue growth outlook to approximately 5%, compared with its previous forecast of 4%-5%. The company now anticipates adjusted EPS growth of 9%-10%, up from its prior expectation of 8%-9%. That upward revision is particularly noteworthy given an uneven global consumer environment. Coca-Cola isn't simply maintaining expectations after a solid quarter as management sees enough momentum to raise the bar for the full year. PepsiCo's Q2 report was respectable on the surface. Net revenue increased 6% to roughly $24.18 billion, coming in ahead of expectations of $23.86 billion. Adjusted net income was $3.01 billion, translating to Q2 EPS of $2.20, which edged estimates of $2.19 and rose nearly 4% YoY. PepsiCo's international operations continue to provide an important source of growth, highlighting one of the company's biggest advantages: its unusually broad portfolio spanning both beverages and convenient foods. Nevertheless, PepsiCo's North American performance remains a sticking point that has weighed on its stock performance. Economic pressure on consumers weighed on demand during Q2 with North American beverage volumes declining 4%, while snack volumes were flat. Management acknowledged that its North American business was softer than anticipated and indicated that improvement is likely to be more gradual over the remainder of the year. That matters because PepsiCo's North American beverage and snack franchises have historically been critical earnings engines. The company has been working to address these challenges through greater affordability, package innovation and promotional activity. PepsiCo is also expanding into areas that could support longer-term growth, including functional beverages, lower-sugar offerings and protein-oriented products. Still, those initiatives need time to translate into stronger operating results. Unlike Coca-Cola, PepsiCo did not emerge from Q2 with a higher full-year growth forecast. For fiscal 2026, PepsiCo continues to project organic revenue growth of 2%-4%. Including expected foreign-exchange benefits and contributions from acquisitions, management's assumptions imply net revenue growth of 4%-6% and adjusted EPS growth of approximately 5%-7%. PepsiCo also expects to return approximately $8.9 billion to shareholders this year, consisting of about $7.9 billion in dividends and $1 billion in share repurchases. Those figures reinforce PepsiCo's appeal as an income-oriented blue-chip investment. Yet when comparing the two companies strictly on their current earnings trajectories, Coca-Cola has the clearer advantage given its 9%-10% EPS growth trajectory for FY26 and expectations of 5% organic revenue growth. Another encouraging takeaway from Coca-Cola's quarter was the breadth of its volume performance. Bolstering Coca-Cola’s 5% increase in total global unit volumes was that Coca-Cola Zero Sugar has been an especially important growth engine, with global unit case volumes jumping 16% during Q2. This suggests Coca-Cola is gaining exposure to consumers who want the familiarity of its flagship brands while reducing their sugar consumption. Meanwhile, Coca-Cola's asset-light concentrated business and enormous bottling network continue to support enviable profitability. The company's Q2 comparable operating margin of 35.6% illustrates the strength of that model. PepsiCo has the advantage of greater diversification because of its massive snack business, but diversification isn't automatically an advantage when its most important market is under pressure. Until PepsiCo demonstrates a more convincing recovery in North America, investors may be inclined to favor Coca-Cola's cleaner growth story. None of this means investors should dismiss PepsiCo for the long term, as the company owns an exceptional collection of brands, including Pepsi, Gatorade, Mountain Dew, Lay's, Doritos and Cheetos. The combination of beverages and convenient foods gives PepsiCo a level of diversification that Coca-Cola doesn't possess. International growth also offers a potentially meaningful runway, while ongoing productivity efforts could improve profitability as PepsiCo works through its current North American challenges. And for longer-term income investors, PepsiCo remains an appealing business thanks to its substantial cash returns to shareholders, with its 4.3% dividend yield notably topping Coca-Cola’s 2.44% Image Source: Zacks Investment Research PepsiCo stock also trades at a cheaper 16X forward earnings multiple, compared with 26X for Coca-Cola. That said, Coca-Cola’s premium valuation is starting to suggest investors are willing to pay up for its more desirable growth story. Image Source: Zacks Investment Research Coca-Cola and PepsiCo remain two of the premier consumer staples companies in the market, but their Q2 reports revealed noticeably different trajectories. PepsiCo continues to generate solid international growth and has a valuable mix of food and beverage brands. However, continued weakness in North America and expectations for only a gradual recovery temper the company's near-term outlook. Coca-Cola, on the other hand, delivered robust volume growth, expanded its operating margin, and posted double-digit comparable EPS growth in Q2. Most importantly, Coca-Cola raised its full-year revenue and earnings outlook, providing investors with greater visibility into continued momentum during the second half of 2026. That fundamental divergence is reflected in Coca-Cola stock sporting a Zacks Rank #2 (Buy) at the moment, supported by a favorable trend of rising earnings estimate revisions, while Pepsi shares currently land a Zacks Rank #4 (Sell) as its EPS estimates have declined since its Q2 report. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CocaCola Company (The) (KO) : Free Stock Analysis Report PepsiCo, Inc. (PEP) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Celsius Holdings, Inc. CELH reported a second-quarter earnings miss even as its broader beverage portfolio continued to expand. Revenues rose 10.6% year over year to $817.9 million, supported by Alani Nu and Rockstar, but adjusted earnings fell 23% to 36 cents per share. The quarter sharpened the divide inside the portfolio. Alani Nu is adding consumers, distribution and innovation-driven growth, while the flagship CELSIUS brand is working through SKU rationalization, softer retail trends and inventory rebalancing. Contracting margins add another hurdle, making the next phase of the story less about portfolio scale and more about whether that scale can translate into better earnings. Adjusted earnings of 36 cents per share missed the Zacks Consensus Estimate of 42 cents. Revenues of $817.9 million also fell short of the $883 million consensus mark, although the top line increased 10.6% from the prior-year quarter. The growth came from a broader portfolio rather than uniform brand momentum. Alani Nu contributed $364.4 million in second-quarter revenues and Rockstar added about $66.5 million, while CELSIUS brand revenues declined 11.7%. That mix helped consolidated revenues grow despite weakness in the company’s flagship franchise. Portfolio retail trends were stronger than reported revenues. U.S. tracked-channel retail sales across CELSIUS, Alani Nu and Rockstar increased 31% in the quarter, and the portfolio held about 20.1% of the U.S. ready-to-drink energy category. The gap between portfolio growth and core-brand performance remains the key issue after the report. Celsius Holdings Inc. price-consensus-eps-surprise-chart | Celsius Holdings Inc. Quote Alani Nu remains Celsius Holdings’ clearest near-term growth engine. The brand generated about $364.4 million in second-quarter revenues, up roughly 21% year over year, while tracked-channel retail sales advanced 55.7%. Its U.S. ready-to-drink energy dollar share reached about 8.7%. Innovation is helping sustain that momentum. Purple Cotton Candy became Alani Nu’s top-selling new flavor during the quarter, following launches such as Cherry Bomb and Lime Slush. Management said successful limited-time flavors can graduate into permanent placements, which can help expand the brand’s core assortment as it scales. Monster Beverage Corporation MNST is a relevant industry benchmark, with its Monster Energy Drinks segment posting 27.6% net-sales growth in the first quarter of 2026. CELSIUS brand revenues fell 11.7% year over year in the second quarter, while tracked-channel retail sales declined 2%. The brand’s U.S. ready-to-drink energy dollar share was about 9.5%, down from roughly 9.9% in the first quarter. Management tied the pressure to SKU optimization, delayed installation of targeted retail space, limited innovation, increased trade and promotional spending, softness in the club channel and distributor inventory rebalancing. The rationalization reduced distribution points before all planned shelf and cooler gains were in place. PepsiCo, Inc. PEP remains central to execution because its direct-store-delivery system distributes CELSIUS, Alani Nu and Rockstar in the United States. There are early productivity signs. Dollars per point of distribution increased about 16% from the first quarter to the second despite roughly 7% fewer distribution points. Fizz-Free tracked-channel dollar sales also rose more than 20% sequentially. Those improvements have not yet restored brand growth. Management expects the third quarter to look similar to the second before CELSIUS returns to growth exiting 2026, with additional 16-ounce innovation planned for early 2027. That timing makes the next several quarters an execution test rather than a confirmed recovery. Gross margin declined 340 basis points year over year to 48.1% in the second quarter. Higher promotional activity and direct-store-delivery channel mix pressured profitability, while aluminum and fuel costs offset some benefits from freight optimization and acquisition integration. Adjusted EBITDA fell 12% to $184.2 million, with adjusted EBITDA margin dropping to 22.5% from 28.4%. The margin contraction explains why double-digit revenue growth did not translate into higher adjusted earnings. Celsius Holdings is pursuing several offsets, including a second North Carolina manufacturing line, direct sourcing, freight improvements and price-pack architecture. Still, management expects third-quarter gross margin to remain in the high 40s at current diesel and aluminum levels. The earnings recovery could therefore lag revenue growth even if portfolio sales remain healthy. Rockstar contributed about $66.5 million in second-quarter revenues, but consumer demand remains soft. Tracked-channel retail sales declined 13% year over year, and the brand held about 1.9% of U.S. ready-to-drink energy dollar share. The integration was completed in June, shifting the focus from operational transition to demand stabilization. Management has cited early velocity gains after SKU rationalization and said Rockstar is tracking in line with the sales expectations set at acquisition. The company is also refreshing packaging and focusing marketing around motorsports, music and gaming. The key issue is timing. Management continues to position 2026 as a stabilization year and Rockstar for a stronger 2027. Until retail growth improves, the brand adds scale to CELH’s portfolio but does not provide the same demand momentum as Alani Nu. Image Source: Zacks Investment Research The second-quarter report showed that Alani Nu can offset part of the weakness in the CELSIUS brand, but it has not yet fully offset the earnings impact of softer core trends and lower margins. That distinction matters because consolidated revenue growth can remain healthy while profitability stays under pressure. CELH currently carries a Zacks Rank #5 (Strong Sell). The stock also has a Growth Score of A, Momentum Score of B, Value Score of D and VGM Score of B. The favorable Growth and Momentum Scores highlight the portfolio’s expansion potential, but the Zacks Rank remains the more important near-term signal because it incorporates the direction of earnings-estimate revisions. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. For investors evaluating the Q2 event, the next proof points are clear: CELSIUS brand growth needs to stabilize, margin initiatives need to overcome commodity and promotional pressure, and Rockstar needs to show better retail demand. Until those trends improve, Alani Nu is carrying more of the portfolio’s growth burden than the headline revenue increase alone suggests. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Celsius Holdings Inc. (CELH) : Free Stock Analysis Report PepsiCo, Inc. (PEP) : Free Stock Analysis Report Monster Beverage Corporation (MNST) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

PEP's $5.92 annualized dividend consumes 90% of core earnings, but back-to-back EPS beats and 84% net income growth signal a real inflection. International profit surged (EMEA +29%, Asia Pacific Foods +35%) while CapEx cuts improved free cash flow coverage, giving the dividend more room than the ratio suggests. Shares yield over 4% at $138 with a $167 analyst price target, but a second earnings miss would force a serious dividend sustainability conversation. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and PepsiCo didn't make the cut. Grab the names FREE today. When PepsiCo (NASDAQ:PEP) delivered its $1.48 per share quarterly dividend, the cash hit accounts on June 30. The payment marks the first at the company's newly raised rate, lifting the annualized dividend to $5.92 from $5.69, a 4% increase. It also extends one of the most impressive streaks on Wall Street: 54 consecutive years of annual dividend increases, cementing Dividend King status. The headline number that should give investors pause: PepsiCo's dividend now consumes roughly 90% of core earnings. Against FY2025 core EPS of $8.14, the new $5.92 annualized payout leaves a slim cushion. On a free cash flow basis, the math is even tighter. FY2025 free cash flow of $7.67 billion against dividends of $7.64 billion works out to a 100% FCF payout ratio. In FY2024 it was 101%, and back in FY2022 it hit 110%. These are the kinds of coverage ratios that make long-term dividend investors uneasy. Yet the Q1 2026 earnings report suggests the denominator is about to do some heavy lifting. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and PepsiCo didn't make the cut. Grab the names FREE today. When PepsiCo reported Q1 2026 results back on April 16, and the numbers represented a clean break from the choppy mid-2025 stretch. Core EPS came in at $1.61 versus the $1.55 consensus, a 4% beat. Revenue grew 9% year-over-year, operating margin expanded, and net income rose 84% YoY. Management cited 9% core EPS growth, 3% organic revenue growth, and roughly 10 basis points of core operating margin expansion. Q2 2026 showed another improvement. EPS of $2.20 beat expectations of $2.19, while revenue of $24.18 billion beat expectations of $23.95 billion. The recovery context matters. PepsiCo missed badly in mid-2025, with Q2 2025 EPS of 92 cents against a $2.03 estimate and Q3 2025 EPS of $1.90 versus $2.27. Then came the Q4 2025 beat at $2.26, followed by Q1 2026. Two consecutive beats after two ugly misses is the definition of an inflection. CEO Ramon Laguarta framed the turn directly on the call: "Looking back to early last year, we defined a new strategy for the company centered on growth and strong productivity to support that growth. We have been executing this strategy diligently across various sectors, and we've seen results in the fourth quarter, with continued improvement in the first quarter." Three threads support the case that the 90% payout ratio gets less scary from here: International momentum. EMEA operating profit grew 29% and Asia Pacific Foods +35% in Q1. Laguarta noted PepsiCo is "benefiting because our supply chain is more efficient than some competitors', especially in the food sector." Productivity is now compounding. CFO Stephen Schmitt highlighted "reduced headcount, plant closures, reduction in SKU count" from last year flowing through, and Laguarta pointed to AI deployment across supply chain and transportation. Notably, costs for North America Foods actually decreased in the first quarter. Volume is back. PFNA delivered 2% volume growth and 4% unit growth, translating to 300 million new consumption occasions versus a year ago. PBNA grew 9%. Management reaffirmed organic revenue growth guidance of 2% to 4% and core constant currency EPS growth of 4% to 6%. Apply that growth rate to the $8.14 FY2025 base, and the payout ratio against the new $5.92 dividend starts moving back toward the high 80s, then lower. PepsiCo's reported free cash flow conversion target is at least 80%, with capital spending below 5% of net revenue. CapEx already came down to $4.42 billion in FY2025 from $5.32 billion in FY2024, which is precisely how the FCF payout ratio improved despite lower operating cash flow. Total 2026 cash return to shareholders is tracking around $8.9 billion: roughly $7.9 billion in dividends plus $1.0 billion in buybacks, supported by the new $10 billion buyback authorization running through February 28, 2030. Where does that leave dividend investors? The stock has gone almost nowhere this year, with PEP down 2.29% year to date through Aug. 5, and down 0.34% over the past year. At a current price near $137.79, the new $5.92 annualized dividend implies a yield well north of the 4% trailing yield Alpha Vantage shows, and shares trade at roughly 16 times forward earnings. The $167.23 analyst target price suggests Wall Street still sees room to run. The grade I'd assign: B. The payout ratio is genuinely elevated and a second consecutive year of earnings compression would force tough conversations in the boardroom. But the 2026 acceleration, international tailwinds and visible productivity gains push the trajectory in the right direction. Investors should keep an eye on PFNA volume conversion to reported growth next quarter, which Laguarta flagged as the key signal. If that handoff happens cleanly, the dividend math stops looking strained and starts looking conservative again. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and PepsiCo didn't make the cut. Grab the names FREE today. Contact [email protected] for any questions or corrections.

Celsius Holdings (NASDAQ:CELH), a functional energy beverage and liquid nutritional supplements provider, closed at $23.77, down 18.46%. The stock fell after second-quarter revenue missed estimates, and investors are watching margins and guidance next. Trading volume reached 43.2M shares, coming in about 324% above its three-month average of 10.2M shares. Celsius Holdings IPO'd in 2007 and has grown 78% since going public. The S&P 500 (SNPINDEX:^GSPC) slipped 0.16% to 7,711, and the Nasdaq Composite (NASDAQINDEX:^IXIC) edged 0.06% lower to 26,348. Among beverage manufacturers focused on functional and energy drinks, Monster Beverage (NASDAQ:MNST) fell 0.32% to $94.16, while PepsiCo (NASDAQ:PEP) declined 0.24% to $138.44. Celsius delivered sales of $818 million and adjusted EPS of $0.36, missing analysts’ estimates by $52 million and $0.06, respectively, prompting the stock to nosedive today. Making matters worse, the core Celsius brand saw its sales decline by 12%, sparking concerns over the energy drink’s long-term brand power. Overall sales for the company rose 11%, powered by the recently acquired Alani Nu, whose retail sales soared 56% in the quarter. On top of this slowing growth, Celsius’s gross profit margin declined 3.4 percentage points, and adjusted EPS slid 23%. There are still many moving parts due to the company’s acquisitions of Alani Nu and Rockstar, but I’d argue today’s market reaction was justified. That said, Celsius trades at roughly 20 times forward earnings and remains the clear No. 3 energy drink company, so I’m not writing it off as dead. Celsius is still a core position for me, but I’ll probably wait for more positive results and new information before adding. Before you buy stock in Celsius Holdings, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Celsius Holdings wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $400,155!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,345,502!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 6, 2026. Josh Kohn-Lindquist has positions in Celsius Holdings. The Motley Fool has positions in and recommends Monster Beverage. The Motley Fool recommends Celsius Holdings. The Motley Fool has a disclosure policy. Stock Market Today, Aug. 6: Celsius Whiffs on Q2 Earnings, Shares Tumble 18% was originally published by The Motley Fool

Over the past six months, PepsiCo’s shares (currently trading at $144.08) have posted a disappointing 6.2% loss, well below the S&P 500’s 7.1% gain. This may have investors wondering how to approach the situation. Is there a buying opportunity in PepsiCo, or does it present a risk to your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free. Even with the cheaper entry price, we don’t have much confidence in PepsiCo. Here are three reasons you should be careful with PEP, plus one stock we’d rather own. Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive. PepsiCo’s average quarterly sales volumes have shrunk by 1.3% over the last two years. This decrease isn’t ideal because the quantity demanded for consumer staples products is typically stable. Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite. Over the next 12 months, sell-side analysts expect PepsiCo’s revenue to rise by 3.4%. This projection doesn’t excite us and indicates its newer products will not accelerate its top-line performance yet. Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions. PepsiCo’s EPS grew at 5% compounded annual growth rate over the last three years. On the bright side, this performance was better than its 2.4% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded. PepsiCo isn’t a terrible business, but it isn’t one of our picks. After the recent drawdown, the stock trades at 16.4× forward P/E (or $144.08 per share). This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We’re pretty confident there are superior stocks to buy right now. Let us point you toward the Amazon and PayPal of Latin America. ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies. Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.

Chicago, IL – July 30, 2026 – Zacks Director of Research Sheraz Mian says, "For the 216 S&P 500 companies that have reported Q2 results, or 43.2% of the index’s total membership, total earnings are up +58.1% from the same period last year on +12.2% higher revenues." Q3 Estimates Increase for Tech and Finance, Fall for Consumer Staples Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>> Here are the key points: For the 216 S&P 500 companies that have reported Q2 results, or 43.2% of the index’s total membership, total earnings are up +58.1% from the same period last year on +12.2% higher revenues, with 86.6% beating EPS estimates and 77.3% beating revenue estimates. This is a notably better showing from these 216 index members relative to other recent periods, both in terms of the earnings and revenue growth rates as well in terms of the beats percentages. The EPS and revenue beats percentages for these 216 index members are notably tracking above the averages for this group of companies over the preceding 20 quarters. The Q2 earnings and revenue growth rates have been boosted by Micron’s MU blockbuster quarterly results and Alphabet’s GOOGL unrealized gain on its SpaceX SPCX stake. However, the earnings and revenue growth rates would still compare favorably with other recent periods when we exclude Micron and Alphabet from these results. Excluding Micron and Alphabet, Q2 earnings for the remaining 214 index members that have reported Q2 results would be up +17.8% (vs. +58.1% otherwise) on +9.8% higher revenues (vs. +12.2% otherwise). For the Finance sector, we now have Q2 results from 69.7% of the sector’s market capitalization in the S&P 500 index. Total earnings for these Finance companies are up +25.1% from the same period last year on +16.2% higher revenues, with 87.3% of companies beating EPS estimates and 78.2% beating revenue estimates. This is a notably better performance from these Finance companies relative to what we have seen from the group in other recent periods. Broad Q2 Outperformance Sustains Positive Revisions Trend Despite Consumer Discretionary & Staples Drag The Q2 earnings season continues to validate our bullish outlook on corporate earnings. An above-average percentage of companies are topping consensus top- and bottom-line estimates while offering constructive commentary for upcoming quarters. This solid execution is sustaining a positive revisions trend, with Q3 earnings estimates rising across 8 of the 16 Zacks sectors since early July—extending the favorable momentum observed in recent quarters. Positive revisions have been particularly notable in Energy, Basic Materials, Tech, and Finance. Conversely, 7 of the 16 Zacks sectors have seen their Q3 estimates revised lower this month, led by cuts in Consumer Staples, Consumer Discretionary, and Autos. The pressure on Consumer Staples directly reflects the exhaustion of sector pricing power. Procter & Gamble’s PG recent earnings miss and conservative outlook underscore escalating consumer pushback against price hikes, which had previously driven sales growth and margin expansion. While everyday essentials typically provide steady defensive cash flows, budget-strained shoppers are increasingly migrating to private-label store brands or paring back unit purchases. P&G is hardly an isolated case—recent updates from Conagra Brands CAG and PepsiCo PEP confirm a broader industry pattern of weakened pricing power and stagnant volume growth. The Earnings Big Picture Estimates for full-year 2026 have also been steadily going up, particularly since the start of March. Full-year 2026 earnings estimates have increased for 11 of the 16 Zacks sectors since the start of March, with the most pronounced gains at the Energy, Basic Materials, Tech, Industrials, Utilities, and Business Services sectors. On the negative side, estimates have been under pressure for the Transportation, Autos, Medical, and Consumer Discretionary sectors since the start of March. History suggests that these favorable revisions will get a boost from the Q2 earnings season and updated management guidance. Free: Instant Access to Zacks' Market-Crushing Strategies Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year. Today you can tap into those powerful strategies – and the high-potential stocks they uncover – free. No strings attached. Get all the details here >> Follow us on Twitter:  https://twitter.com/zacksresearch Join us on Facebook:  https://www.facebook.com/ZacksInvestmentResearch/ Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates. Media Contact Zacks Investment Research 800-767-3771 ext. 9339 [email protected] https://www.zacks.com Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer. Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Procter & Gamble Company (The) (PG) : Free Stock Analysis Report Micron Technology, Inc. (MU) : Free Stock Analysis Report PepsiCo, Inc. (PEP) : Free Stock Analysis Report Conagra Brands (CAG) : Free Stock Analysis Report Alphabet Inc. (GOOGL) : Free Stock Analysis Report Space Exploration Technologies Corp. (SPCX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Yesterday’s markets weren’t good. All three major indexes lost ground on the day—the Dow lost 2.19%, the S&P 500 was down 1.52%, and the Nasdaq Composite was off 1.74%—as investors worried about the escalating conflict in Iran. Corning Delivers Strong FCF Results, But Investors Play GLW Stock's Drop With an Unusual Short-Put Play How Volatility Clustering Could Trigger a Comeback in Baker Hughes (BKR) Stock 1 Options Trade to Make Now to Bet on ON Semiconductor Stock Bouncing Back Tired of missing midday reversals? The FREE Barchart Brief newsletter keeps you in the know. Sign up now! As I write this Friday morning before the markets open, Microsoft’s (MSFT) strong Q3 2026 results have futures in positive territory. Whether they stay positive depends on what the federal government reports for the U.S. core personal consumption expenditures index, the Federal Reserve’s key inflation number. Economists expect the annual rate to contract by 10 basis points to 3.3%. After yesterday’s decline, the S&P 500 is up just 6.9% in 2026, after jumping out to a 11.3% gain through the first five months of the year. It’s in real danger of losing more of these gains over the final five months of 2026. I continue to be skeptical that the markets will remain detached from the economic woes facing most Americans. I hope I’m wrong. In Thursday’s options markets, the volume was 62.37 million, just shy of the 90-day average. Calls outnumbered puts 54% to 46%. Options expiring in six days or more accounted for 39% of the volume; this is where I like to focus my attention. Yesterday’s unusual options activity wasn’t anything to write home about, with just two Vol/OI (volume-to-open interest) ratios over 100--Sellas Life Sciences (SLS) at 109.02 and Infosys (INFY) at 104.51. As I examine yesterday’s activity, PepsiCo’s (PEP) Oct. 16 $155 call had the 18th-highest Vol/OI ratio at 29.34. However, it is the call’s volume that’s caught my interest. Read on. I’ll tell you why. There are three things I notice about this particular call option: 1) The volume of 40,487 was 42% of PepsiCo’s daily total of 97,549. 2) The daily total was the fifth-highest in the past three months. 3) The $155 call volume was 89% of PepsiCo’s 30-day average. A trader/investor made a strong conviction bet on PepsiCo’s rebound. Down 9% over the past five years, yesterday’s bet could be indicative of good things to come. The Oct. 16 $155 call expires in 79 days, eight days after PepsiCo reports its Q3 2026 results. The company’s delivered EPS surprises in three of the last four quarterly reports. However, it missed the street’s EPS estimate when it reported Q2 2026 results on July 9 before the markets opened; PEP shares closed 3.3% lower on the day. Long-time PepsiCo shareholders have paid for the company’s eight consecutive quarters of price increases in 2022 and 2023. Consumers went elsewhere for their snacking and beverage needs. I remember thinking at the time that these increases would likely backfire. Coca-Cola (KO) has been a big beneficiary of PepsiCo’s shortsightedness. From PepsiCo’s all-time high of $196.88 on May 1, 2023, its shares have lost 27%, while KO stock is up 39% and the S&P 500 has gained 75% in the same period. In September 2025, activist investor Elliott Investment Management announced it had taken a $4 billion position in PepsiCo, suggesting several ways the company could improve its profitability and growth. On Dec. 8, 2025, PepsiCo and Elliott agreed to a restructuring plan intended to create shareholder value. Initiatives include cutting the number of products sold in the U.S. by 20%, targeted price reductions which began in earnest in the spring, and ongoing efforts to increase its operating efficiencies. If the turnaround is gaining traction, you wouldn’t know it by the share price, which has bobbed up and down since Elliott’s announcement last September; the stock is basically flat since. Nonetheless, yesterday’s unusually active Oct. 16 $155 call suggests a trader/investor feels there’s enough meat on the bone to make a bullish options bet on PepsiCo. While the trade sizes for the three trades shown above are partially hidden, I can assure you that they are 40,000, 20,000, and 20,000. As you can see, the trade for 40,000 is for the Oct. 16 $155 call. It accounted for 98.8% of the volume for the $155 strike price. One of the two 20,000-contract trades is also a 79-day DTE (days to expiration); only the strike price is $145. The final 20,000-contract trade is for a Sept. 18 $155 call. You’ll notice that all three trades took place yesterday at 10:59 a.m. ET. That tells me that the three trades were all part of one specialized Ratio Call Diagonal Spread options strategy. In this case, the ratio is 2:1:1, or 40,000:20,000:20,000. The easiest way to understand this strategy is to break it down into three bets. The first bet involves the trader/investor buying $12.04 million of Oct. 16 $155 calls at $301 per contract. Here’s how it looks early in Thursday trading. The ask price of $2.65 is slightly less than the $3.01 paid yesterday. The ask price is a reasonable 1.87% of the share price. The breakeven is $157.65, which means the trader/investor makes money if it gains more than 11.49% by Oct. 16. Given the expected move is just 7.9%, the likelihood of breaking even is just 18.82%. Before questioning why someone would make such a bet, let’s consider the other two bets. The second bet is to sell 20,000 Sept. 18 $155 calls for $3.24 million in premium income. That lowers the cost of the Oct. 16 $155 calls by 27%; not an insignificant amount. The risk here is that PepsiCo announces shortly before the September expiration that Berkshire Hathaway (BRK.B) sold all of its Coca-Cola stake and put it into PEP stock—the shares rocket 25% higher to $175. The buyer of those calls could exercise their right to buy at $155. On this bet, the trader/investor would be out $36.76 million [$175 share price - $155 strike price - $1.62 bid price * 20,000 * 100]. But that’s not the entire story. The third bet is to buy 20,000 Oct. 16 $145 calls, which are closer to being ITM (in the money), therefore costing $13.12 million, $1.08 million more than the 40,000 Oct. 16 $155 calls, for half the number of contracts. Assuming the Berkshire Hathaway event happens and PEP is $175 on Oct. 16, here’s how the trader/investor fares from this ratio call diagonal spread. Bet 1 - $67.96 million profit [$175 share price - $155 strike price - $3.01 trade price * 40,000 * 100]. Bet 2 - As mentioned earlier, they would be out $36.76 million; and Bet 3 - $46.88 million profit [$175 share price - $145 strike price - $6.56 trade price * 20,000 * 100]. Ultimately, the bet would generate a $78.08 million profit. If at the Sept. 18 and Oct. 16 expiration dates, the share price is $165, the profit would be $38.08 million; at $155, it would be a $1.92 million loss; and at $145, the loss would be $21.92 million. The breakeven is about $155.50. It’s an interesting bet. On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com

This article first appeared on GuruFocus. Revenue (ex-surcharge): $607.4 million for the SAO segment, up 11% year-over-year and 4% sequentially on higher volume. Operating Income: $206.9 million for the fourth quarter, a new record, up 37% year-over-year and 11% sequentially. SAO Adjusted Operating Margin: 37.8%, a new record, compared to 35.6% in the prior quarter and 30.5% a year ago. SAO Operating Income: $229.7 million, a new all-time high for the segment, up 10% sequentially. PEP Operating Income: $7.1 million in the fourth quarter. Gross Profit: $268.9 million, up 26% year-over-year and 7% sequentially. Earnings Per Share (diluted): $3.23 for the quarter. Cash from Operating Activities: $240.1 million in the fourth quarter; $605 million for the full fiscal year 2026. Adjusted Free Cash Flow: $155 million in the fourth quarter; $362.3 million for the full fiscal year 2026. Capital Expenditures: $85.1 million in the fourth quarter; $242.7 million for the full fiscal year 2026. Share Repurchases: $45.2 million in the fourth quarter; $179.1 million for the full fiscal year 2026. Total Liquidity: $892.4 million as of quarter end, including $393.3 million in cash. Net Debt-to-EBITDA Ratio: Remained well below 1.0x. Warning! GuruFocus has detected 6 Warning Signs with KKR. Is CRS fairly valued? Test your thesis with our free DCF calculator. Release Date: July 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Carpenter Technology Corp (NYSE:CRS) delivered another record quarter with operating income of $206.9 million, up 11% sequentially and 37% year-over-year. The SAO segment achieved a record adjusted operating margin of 37.8%, marking the 18th consecutive quarter of margin expansion. The company generated strong cash flow, with $240.1 million from operations and $155 million in adjusted free cash flow in Q4. Management provided a robust FY2027 outlook, expecting operating income between $850 million and $880 million, representing 21% to 25% growth. The long-term FY2029 operating income target of approximately $1.2 billion to $1.3 billion implies a 20%+ CAGR, supported by the brownfield expansion project. The company experienced the sudden passing of its newly appointed CEO, Brian Malloy, creating a leadership transition. Sales in the energy end-use market declined 22% sequentially and 12% year-over-year due to order timing and production scheduling. The average base price per pound in the SAO segment decreased due to a higher proportion of lower-priced products in the sales mix. Some structural aerospace customers remain cautious in their ordering patterns, ordering below expected demand rates. The PEP segment's operating income is expected to be relatively low, between $6 million and $7 million in the upcoming quarter. Q: Tim, can you share what the FY29 EBIT guide assumes with respect to the brownfield's contribution to earnings?A: Timothy Lain (CFO): The brownfield project is on track, on schedule, and on budget, coming online in early fiscal '28. In '28, we expect it to be OI incremental. The next milestone we set was in 2030, where it would contribute roughly $150 million of incremental OI. For FY29, it won't be linear; we'd expect it to be a bit more weighted towards the $150 million number, and that's all baked into the current guide. Q: And then Tony or Tim, can you parse out the 23% SAO volume growth in the quarter by end market?A: Timothy Lain (CFO): There was a lot of growth from a volume perspective in our industrial consumer business sequentially. This leads to a lower average price per pound, but that's not necessarily a negative. It just means we shipped more volume of some lower-price material, which carries an overall attractive margin profile, which is why we saw margin growth in SAO in the quarter. Q: And the thing I'm just a bit confused by is the business has been accelerating EBIT growth in each of the last few quarters, but the guide for the first quarter and for 2027 as a whole implies that this EBIT growth begins to moderate a bit. Why would the EBIT growth moderate from here as opposed to accelerate in that backdrop?A: Tony Thene (CEO): I don't necessarily disagree with you. Our goal is always to have guidance that's right out in front of us. If you want to take that guide and say that's the floor for FY '27, you wouldn't get any pushback from me. Q: Maybe, Tony, just as you thought about guidance for '27 and also for '29, but for '27 more immediately, what do you anticipate in terms of the contributors to that operating income growth maybe in order of rank? So price, volume, productivity, mix... How would you rank order those?A: Tony Thene (CEO): Probably the biggest, most significant input to FY '27 is the build rate that Boeing and Airbus is going to hit. That's the biggest input. Certainly, price is going to be a big driver, but also volume in some of the non-aerospace markets will be a significant tailwind. You still have some structural customers that are not ordering at the levels they acknowledge they should be ordering at. Productivity is always a big factor for us, and there is a healthy dose of productivity actions in our plans for this fiscal year. Q: Your Arrow in defense for you guys grew 15% ex surcharge in '26, you mentioned 17% in Q4. What do you think, does that growth rate you think accelerate in '27 relative to '26?A: Tony Thene (CEO): We see aerospace being meaningfully higher in FY27. It has to be higher with the build rates that Boeing and Airbus wants to hit. Is it exactly that same growth rate? I think you could argue that would be the case. The reason I'm hesitating is it depends on the success primarily of Boeing and when they can get to that next level. Q: I wanted to start with some of your commentary on the cautious ordering from the structural customers. And I guess based on your conversations with those customers, what do you feel is really contributing to this?A: Tony Thene (CEO): That's a primary driver. They've had a history of maybe being burned in the past. A lot of it depends on the individual metrics of that company. But yes, I think as you see Boeing continue to improve, I don't think that ordering pattern will be gradual. I think it will be when that time hits here in the next quarter or two, you'll see a significant uptick. Q: Could you maybe just talk a bit more about what's implied in your FY29 outlook at a submarket level? Just looking at engines, fasteners, medical, and then maybe even further to the extent that you can aftermarket and OE.A: Tony Thene (CEO): I don't have any concerns at all about the mix between OEM and MRO or aftermarket in FY29. It's premature for me to talk about in detail what's in the FY29 number. You should assume that we see all of our markets increasing going forward in FY29 because we are in the right high-value end markets, and all the macro demand signals are pointing very positive. With aerospace and medical IGT, you're well over 80% of our revenue, and all of those are projected to be very strong. Q: And then I guess looking again still at FY '29, you've said it's at the peak of earnings. I mean, is that on a margin or nominal earning basis or both? And maybe additionally, if it is on a margin, what do you truly view as maybe the high watermark for margins?A: Tony Thene (CEO): To the first part of your question, it's both. As we look past FY '29, we usually go out five years for us internally, and we see growth, which is why we are confident we see growth beyond FY '29. Q: I know in the past, sometimes you've given color on long-term agreements that come up for renewal and the magnitude of price hikes associated with those. I was wondering over the next year or two, are there a number of LTAs that come up for renewal again?A: Tony Thene (CEO): I won't give you the exact percent of what comes up, but I will say there are a couple very significant contracts that will come up for renewal over the next two years, and I will go as far as saying there's one large one that we're currently working on now. So, yes, there's still opportunity there. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Coca-Cola’s Q2 performance benefited from higher pricing, favorable product mix, and stronger concentrate demand. Coca-Cola raised its 2026 organic revenue growth outlook to 5%. Morningstar remains positive but sees limited upside due to valuation concerns, favoring PepsiCo for stronger potential gains. The Coca-Cola Co. (KO) stock rose overnight after the beverage giant posted a strong second-quarter (Q2) performance, driven by resilient demand across its global portfolio. Higher sales, improved profitability, and stronger earnings prompted Morningstar analyst Kristoffer Inton to reassess the company’s outlook while maintaining a cautious view of the stock’s current valuation and potential upside. Coca-Cola stock ticked 0.7% higher overnight, after clocking its best day in over five years in the regular session on Tuesday. See what 10M+ investors are talking about. Get the Stocktwits Daily Rip for what retail is watching right now, free to your inbox According to Inton, Coca-Cola’s organic sales growth picked up in Q2, as higher pricing, favorable product combinations, and increased concentrate demand supported results. Profitability also improved as operating margins expanded, while adjusted earnings per share climbed from the prior-year period. Morningstar noted that marketing initiatives, including a successful World Cup-related campaign, favorable weather conditions and stronger sales volumes across markets contributed to the performance. Coca-Cola’s Q2 revenue grew 7% year-on-year to $13.4 billion with $0.97 earnings per share, both exceeding the Street estimates of $13.2 billion and $0.93, respectively, according to Fiscal AI data. Operating margin improved by 80 basis points to 34.9%. Coca-Cola is investing in regional innovation centres to create products that better suit the tastes and needs of customers in different markets. Morningstar believes these efforts could help the company maintain steady revenue growth in the long run. Following the strong first half of the year, Coca-Cola increased its outlook for future growth. The company now expects organic revenue to expand 5% in 2026 and projects comparable earnings growth between 9% and 10%. However, management warned that conditions could become more challenging later in the year. Morningstar expects to raise its fair value estimate for Coca-Cola by a mid- to high-single-digit percentage, reflecting improved sales and margin expectations. Despite the positive operating trends, the analyst believes shares are trading slightly above their estimated worth after gaining more than 25% this year and outperforming the broader market. Morningstar said Coca-Cola remains well-positioned to handle weaker consumer spending and competition in the beverage industry. However, the firm sees potentially stronger upside in PepsiCo Inc. (PEP), citing the company’s snack division and continued focus on affordable innovation. Additionally, Goldman Sachs also raised its price target on KO to $86, while Evercore ISI increased its price target to $100 after Q2 earnings. On Stocktwits, retail sentiment around the stock improved to ‘bullish’ from ‘neutral’ territory the previous day. A user said, “Unstoppable boomer stock.” Another user said, “$KO may not get wild $50 dollar swings… but the slow steady beat of KO has turned out to be one of my most profitable stocks.” KO stock has gained over 27% year-to-date. Also See: Why Did SKHY, EOSE, OKLO Stocks Plunge To 52-Week Lows Today? For updates and corrections, email newsroom[at]stocktwits[dot]com. Shivani Kumaresan has no position in any of the stocks mentioned in this article. StockTwits' news team content is for informational purposes only and is not intended as investment advice. For more, see our editorial policy. This article was originally published on StockTwits. Related: DCG Says US Faces 'Alarming' Offshore Flight Without CLARITY Act, Demands Vote Before August Recess BREAKING: Fed Keeps Rates Steady For The Fifth Straight Meeting V, SNOW Stocks Hit Fresh 52-Week Highs Today – What’s Got Investors Buzzing?

PepsiCo Inc. PEP offers investors a familiar but mixed setup after its second-quarter 2026 results. The stock trades below several valuation benchmarks and carries a dividend yield above 4%, while international demand remains a stabilizing force.The debate is whether that support is enough. Softer North American trends, margin pressure, high debt and negative estimate revisions keep the investment case from looking broadly favorable. PepsiCo is trading at 16.2X forward 12-month earnings, below the soft-drink sub-industry multiple of 19.98X and the S&P 500 multiple of 20.11X. It also sits below its five-year median of 20.75X, suggesting the market is already discounting slower near-term momentum.The $151 price target compares with the recent stock price of $142.86. That spread points to measured upside rather than a deep-value setup. The Coca-Cola Company KO remains a relevant beverage benchmark, while Keurig Dr Pepper Inc. KDP gives investors another North American beverage comparison when assessing category demand and valuation. Image Source: Zacks Investment Research PepsiCo still offers a meaningful income component. The company expects to return $8.9 billion to shareholders in 2026, including $7.9 billion in dividends and $1 billion in share repurchases.The annualized dividend rose to $5.92 per share from $5.69 per share, effective with the June 2026 payment. Management also continues to target free cash flow conversion of at least 80%, which supports the dividend program while leaving room for business reinvestment. Image Source: Zacks Investment Research Second-quarter profitability showed the pressure behind the headline earnings beat. Core gross margin declined to 54.3% from 55.1%, while core operating margin contracted 40 basis points to 16.8%.Productivity savings and pricing helped, but affordability investments, higher operating costs and inflation limited margin leverage. Debt also remains a constraint, with short-term obligations of $10.6 billion and long-term debt of $42.6 billion at quarter-end, pushing combined debt above $53 billion. Current projections call for 2026 revenues of about $98.8 billion, up from $93.93 billion in 2025. Earnings are projected at $8.56 per share, compared with $8.14 in 2025.Those forecasts still show growth, but estimate direction is less supportive. The current fiscal-year earnings estimate declined 0.5% over the past four weeks, indicating weaker near-term earnings conviction despite second-quarter revenue and earnings growth. The bottom line is balanced. PepsiCo’s lower earnings multiple, cash returns and international resilience give the stock some defensive appeal, but margin compression and North American softness reduce the case for aggressive buying.The stock currently carries a Zacks Rank #4 (Sell), which reflects unfavorable earnings-estimate revision trends. That rank is especially important because the Zacks Rank is designed to capture near-term estimate momentum.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.PepsiCo’s Style Scores also argue for caution. Its Value Score of C, Growth Score of C and VGM Score of C do not signal a decisive bargain or broad-based strength, while its Momentum Score of F reflects weak recent stock action.For investors focused on income and consumer-staples exposure, PEP remains a major global franchise. For those looking for improving near-term earnings momentum, the current ranking and Style Scores suggest patience. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PepsiCo, Inc. (PEP) : Free Stock Analysis Report CocaCola Company (The) (KO) : Free Stock Analysis Report Keurig Dr Pepper, Inc (KDP) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research