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Investors can approximate the average market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. That downside risk was realized by PepsiCo, Inc. (NASDAQ:PEP) shareholders over the last year, as the share price declined 12%. That’s well below the market return of 16%. Zooming out, the stock is down 11% in the last three years. On the other hand, we note it’s up 8.8% in about a month.

So let’s have a look and see if the longer term performance of the company has been in line with the underlying business’ progress.

We’ve found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Unhappily, PepsiCo had to report a 20% decline in EPS over the last year. The share price fall of 12% isn’t as bad as the reduction in earnings per share. So the market may not be too worried about the EPS figure, at the moment — or it may have expected earnings to drop faster.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

It might be well worthwhile taking a look at our free report on PepsiCo’s earnings, revenue and cash flow.

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of PepsiCo, it has a TSR of -8.8% for the last 1 year. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

Investors in PepsiCo had a tough year, with a total loss of 8.8% (including dividends), against a market gain of about 16%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn’t be so upset, since they would have made 5%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that PepsiCo is showing 3 warning signs in our investment analysis , and 1 of those is a bit concerning…

If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

By Tomi Kilgore

Repeating patterns of higher highs and holding support show bulls continue to succeed – but a break of mid-September support would be the first sign of failure

Despite concerns that a stock-market correction is imminent, repeating patterns of success by bulls show the uptrend is still intact – for now.

Those who believe a stock-market correction is imminent may have plenty of reason to do so, except the one thing that may matter the most for chart watchers – failure.

That’s why the S&P 500’s SPX 6,550 level is so important in the short term. There’s a tendency to look at the benchmark stock index’s chart for a signal suggesting that its uptrend is ending – but around market tops, it’s often what the index couldn’t do that confirms a reversal. And despite credit worries, a prolonged government shutdown and renewed tariff fears – which recently triggered the S&P 500’s biggest one-day selloff in six months – the charts still suggest bulls are in control.

What needs to happen for bulls to lose confidence, and confirm that a correction is in the works, is that the S&P 500 has to start failing to make higher highs while failing to hold support.

“Going back to the end of April, there have been multiple instances that [the S&P 500] looked ready to roll over; each one appeared ominous and threatened to flip momentum from positive to negative,” wrote Frank Cappelleri, technical analyst at CappThesis LLC, in a note to clients. “So far, none of those setups have confirmed, though, and that includes the current potential bearish pattern taking shape now (so far).”

As the following chart shows, there are some S&P 500 behaviors that have repeated in those previous and current “instances” that continue to confirm the uptrend.

Each potential reversal area, defined by different colors in the above chart, has been above the previous area. And in each colored area, the second peak has been higher than the first.

What that shows is that bulls continue to succeed in making higher highs – and as the saying among charts watchers goes, there’s nothing more bullish than a new high.

Additionally, the chart support created by the low of the pullback from the first peak in each colored area was successful in stopping the decline from the second peak.

Basically, each time bulls bought the dip, they were rewarded with a higher high. And success breeds the confidence to keep buying.

In the current setup, what would “confirm” a correction in the works is if the S&P 500 falls below the mid-September low, at 6,550, before the index can make a higher high. So the key upside levels to watch while the S&P 500 stays above 6,550 is the Oct. 15 intraday high of 6,724.12 and the Oct. 9 record high of 6,764.58.

If support would give way first, it would create a modified version of the widely known reversal pattern referred to as a “head and shoulders” – with the key component of that pattern being that the second shoulder is below the head.

It would also end what the Dow Theory, which has remained relevant on Wall Street for more than a century, defines as an uptrend – a repeating pattern of higher peaks and higher troughs.

CappThesis’s Cappelleri wrote that if support gives way, the initial measured-move target would be 6,335. He derived that target by measuring the height of the previous pattern, from support to the record high – 215 points – and then subtracting that from the broken support level.

While that might not seem too worrisome, as it would mark a pullback of just 6.4% from the record close, Cappelleri noted that it would be nearly double the size of any pullback since the April lows.

A correction – which many on Wall Street define as a decline of 10% to 20% from a significant high – would start if the S&P 500 falls to 6,088.

Keep in mind, however, that another tenet of the Dow Theory is that a trend remains in place until it provides a clear signal that it has reversed.

“Again, this has not happened yet, but it’s a scenario we need to stay alert to, as a confirmed breakdown would clearly shift the market’s complexion in a meaningful way,” Cappelleri wrote.

Basically, investors shouldn’t play the correction card yet – but they should be prepared, so they can act fast if that signal flashes.

-Tomi Kilgore

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  10-19-25 0900ET
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