TLDRs:
- PepsiCo stock rises as major snack price cuts attract investors.
- Lay’s, Doritos, and Cheetos discounts aim to boost sales volume.
- Q4 revenue surpasses forecasts, supported by productivity and cost savings.
- Dividend hike and $10B buyback strengthen shareholder confidence in 2026.
PepsiCo (NASDAQ: PEP) saw its stock climb once again this week, fueled by aggressive price cuts on some of its most popular snack brands.
Shares closed at $166.18 in after-hours trading Wednesday, representing a roughly 2% increase from the day’s opening. Trading ranged between $161.81 and $167.94, with approximately 13.3 million shares exchanging hands, highlighting strong investor attention.
The rally follows PepsiCo’s announcement that Lay’s, Doritos, Cheetos, and other major snack products will see suggested retail price reductions of up to 15%. These cuts, rolling out across the United States this week, are aimed at encouraging volume growth as consumers continue to resist rising grocery bills and increasingly turn to more affordable alternatives.
Price Cuts Target Consumer Affordability
PepsiCo Foods U.S. CEO Rachel Ferdinando emphasized the company’s focus on listening to consumers.
“We’ve spent the past year listening closely to consumers, and they’ve told us they’re feeling the strain,” she said, noting that the discounts are designed to make snacks more accessible.
The company also highlighted the influence of new appetite-suppressing weight-loss drugs, which have begun affecting snack consumption trends. By adjusting prices downward and offering smaller portion options, PepsiCo aims to capture consumers who are seeking affordability while maintaining sales volume amid evolving dietary habits.
Earnings Surpass Expectations
The pricing strategy comes on the heels of a strong fourth-quarter performance. PepsiCo reported net revenue of $29.34 billion, surpassing analysts’ $28.97 billion estimate, while core earnings per share came in at $2.26 versus the expected $2.24. Organic revenue, which accounts for currency fluctuations and acquisitions, rose 2.1%, and total revenue increased 5.6% year-over-year.
CEO Ramon Laguarta noted that productivity improvements played a crucial role in sustaining operating margins despite the price cuts. Financial analysts have described the quarter as robust, pointing to innovation, efficiency, and strategic pricing as key drivers of continued growth.
Dividend Hike and Share Buyback Plan
Alongside its earnings report, PepsiCo announced a 4% increase in its annualized dividend, raising it to $5.92 per share starting with the June 2026 payout. The board also declared a quarterly dividend of $1.4225 per share, payable March 31 to shareholders of record on March 6.
To further reward investors, the company unveiled a $10 billion share buyback program set to continue through February 28, 2030. These financial moves, combined with the recent price cuts, aim to strengthen investor confidence as the company navigates potential margin pressures in the North American snack market.
Risks and Market Outlook
While cheaper chips have energized the stock, analysts caution that the strategy is not without risks. If retailers fail to pass the discounts along or if foot traffic does not increase as expected, profits could face downward pressure.
Competition also remains a factor, with rivals such as Mondelez warning that higher pricing may dampen growth in 2026. Investors will be watching closely to see if PepsiCo can balance its pricing strategy with productivity gains, innovation, and shareholder returns in the months ahead.
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