PepsiCo (PEP) shares have been in a major downtrend in 2026, but the derivatives market believes the company’s upcoming earnings on October 8 are unlikely to offer much relief.
Consensus is for the beverage giant to record $2.29 a share of earnings (EPS) on nearly $25 billion in revenue, which would represent about a 4.2% top-line growth on a year-over-year basis.
Heading into the quarterly print, PepsiCo stock is down some 25% versus its year-to-date high.
Where options data suggests PepsiCo stock is headed
Options traders are convinced that PEP shares will sink further after posting earnings before market open on Thursday.
According to data from Barchart, the put-to-call ratio on contracts expiring October 9 sits at 1.02 currently, indicating a dovish skew (a reading above 1.00 is typically interpreted as bearish).
And the lower price on those options contracts is set at about $121 as of writing, signaling potential for another 3% decline by the end of this week.
Crucially, the technical setup heading into PepsiCo’s earnings event also warrants caution in playing the beverage stock at current levels.
PEP sits decisively below its key moving averages (MAs), with an RSI in the early-20s, suggesting massive downward pressure that may weigh further on the company’s share price in the near-term.
Why options sentiment is dovish for PEP shares
The dovish options market view is likely premised on deteriorating volume growth and persistent pressure on consumer spending.
After years of aggressive price hikes to offset inflation, PepsiCo Inc. is seeing pushback from value-conscious buyers who are trading down to private-label alternatives or cutting back on discretionary snacks.
Key segments like Frito-Lay North America are facing sluggish sales volumes, forcing Wall Street to downgrade the stock over market share losses.
Plus, headwinds from shifting dietary trends – including the rising adoption of GLP-1 weight-loss medications – continue to weigh on long-term demand for packaged foods and sugary beverages.
With limited room for further price increases, traders doubt the giant can deliver a top-line surprise strong enough to halt PepsiCo’s share price decline.
How to play PepsiCo Inc at current levels?
Despite the prevailing market gloom, value-oriented investors see reasons for cautious long-term optimism.
PepsiCo’s steep sell-off has compressed its valuation to attractive levels, with shares trading near multi-year low multiples.
Moreover, PEP stock’s forward dividend yield has drifted up toward an appealing ~4.7%, providing a significant safety cushion for patient income investors.
While Wall Street remains largely on the sidelines with a consensus “Hold” rating, the average 12-month price target near $148 still points to a double-digit upside potential once volume metrics normalize.
All in all, unless tomorrow’s release uncovers unexpected operational weaknesses, PepsiCo’s defensive balance sheet and reliable income profile may help establish a floor near current support levels.
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