Cramer Highlights PepsiCo’s Frito-Lay Woes Contrasts with P&G’s Stability

Jim Cramer recently discussed PepsiCo, Inc. (NASDAQ:PEP) and The Procter & Gamble Company (NYSE:PG) on his show Mad Money, highlighting key challenges facing both consumer-staples giants. Cramer noted that while PepsiCo had been considered for a 5% position in his Charitable Trust, the company's 10% year-to-date decline suggests its dividend may not provide the expected support. He attributed this weakness to struggles in the Frito-Lay business, which is currently facing headwinds. In contrast, Cramer pointed to Procter & Gamble as a stronger performer, largely due to its lack of exposure to the volatile food sector.

PepsiCo's second-quarter earnings revealed a 2% decline in revenue for its PepsiCo Foods North America division, with core constant-currency operating profit dropping 8%. The company has been adjusting its pricing strategy, recently announcing plans to raise prices on some chip brands by a low- to mid-single-digit percentage range after significant cuts earlier in the year. PepsiCo is set to report third-quarter results on October 8.

Procter & Gamble, meanwhile, reported slower growth with fiscal 2026 net sales increasing just 3% to $87 billion and fourth-quarter organic sales remaining flat. The company expects fiscal 2027 organic sales growth of 1% to 3% and core EPS of $6.89 to $7.11. CEO Shailesh Jejurikar emphasized the company's focus on putting the consumer first, integrated execution, and productivity. P&G is scheduled to report first-quarter fiscal 2027 results on October 22.

Both companies face risks. PepsiCo's downside risk centers on continued weakness in Frito-Lay, while P&G's challenges include limited earnings growth and rising costs. Hedge fund positioning shows PepsiCo with 68 holders in Q2, down from 72 in Q1, while P&G had 83 holders, up from 78. Short interest stands at 1.90% for PepsiCo and 1.04% for P&G. P&G trades at a forward P/E of 21.23, while PepsiCo trades at 14.86, reflecting near-term volume adjustments in its convenient foods division.