PepsiCo (NASDAQ:PEP) is in trouble as the New York state has sued the food and beverage giant for plastic pollution in the Buffalo River. New York Attorney General Letitia James filed a civil complaint in the state Supreme Court on November 15 seeking unspecified damages and demanding remedial measures for the company’s acts. James also noted that PepsiCo has misled consumers by issuing environment-friendly statements and cited its failure to prevent pollution by reducing the use of single-use plastic products.
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In 2022, James’ office surveyed 1,916 trash pieces along the river and found that the majority belonged to PepsiCo’s wrappers, bottles, and bags. Second in a row, with considerably lesser contribution, was burger maker McDonald’s (NYSE:MCD). The massive presence of these single-use plastics is affecting Buffalo’s water supply and polluting the environment, James said. Further, the lawsuit stated that the plastics caused a “public nuisance” and health problems, including “early puberty in females, reduced sperm counts, altered functions of reproductive organs, obesity, altered sex-specific behaviors, and increased rates of some kinds of cancers.”
In response, PepsiCo has maintained that it strives to reduce the use of single-use plastic in its products. Plus, the company said that it is committed to meeting its aim of making all of its packaging “recyclable, compostable, biodegradable or reusable” by 2025.
Is PEP Stock a Buy Now?
Last month, PepsiCo reported better-than-expected third-quarter results and raised its full-year earnings outlook. However, volumes were under pressure in the quarter. Meanwhile, PEP stock has lost 4.6% so far this year. Based on adjusted earnings per share (EPS), PepsiCo is trading at a forward P/E (price-to-earnings) multiple of 22.1x, higher than the sector average of 17.5x.
On TipRanks, PEP stock has a Moderate Buy consensus rating based on 11 Buys and eight Hold ratings. The average PepsiCo price target of $189.67 implies 13.4% upside potential from current levels.
