PepsiCo, Inc.
PEP · Nasdaq
PEP · Nasdaq
Reports Oct 8, 2026, before the open.
Consensus is $2.30 EPS for Sep 2026 across 7 estimates, ranging $2.26 to $2.32.
PepsiCo’s second quarter was a modest underlying beat with a widening split between international growth and North American weakness. Core EPS of $2.20 was slightly ahead of the $2.19 consensus and increased 4% from $2.12 a year ago, while revenue rose 6.4% to $24.18 billion from $22.73 billion. Sequentially, revenue increased from $19.44 billion in Q1 and operating profit from $3.21 billion to $4.02 billion, although the quarter’s $2.18 GAAP EPS was heavily flattered by the absence of last year’s impairment charges.
The operating story was organic growth and productivity, but not broad-based margin expansion. Organic revenue increased 2.4%, supported by 1% organic volume growth and 2% effective net pricing. International segments led: Asia Pacific Foods volume rose 10%, while IB Franchise and Asia Pacific Foods each delivered 9% organic revenue growth. North America remained the constraint, with PFNA revenue down 2% and PBNA organic revenue down 6% as PBNA unit volume fell 4%. Core operating profit grew 4%, but core margin declined 40 basis points to 16.8% because operating-cost increases offset productivity savings and pricing. Management affirmed full-year guidance, preserving a 2%-4% organic revenue target and 4%-6% core constant-currency EPS growth range.
Reported revenue growth benefited from foreign exchange and portfolio changes, so the 2.4% organic increase is the cleaner read on demand. Organic volume contributed 1 percentage point and effective net pricing contributed 2 percentage points. Foreign exchange added 2.2 percentage points to reported growth, while acquisitions and divestitures added 1.8 points.
The quarter showed better earnings quality than the headline GAAP increase suggests, but limited operating leverage. Core operating profit rose 4% to $4.07 billion, while core operating margin fell to 16.8% from 17.2% a year ago. Productivity savings and effective net pricing were partly offset by higher operating costs. Core constant-currency EPS increased 1%, indicating that foreign exchange was an important contributor to the reported core EPS increase.
GAAP earnings growth was dominated by the absence of prior-year impairment charges rather than a comparable step-up in operating performance. PepsiCo recorded no intangible-asset impairment in Q2 2026, versus $1.86 billion in Q2 2025, primarily related to Rockstar in PBNA and EMEA and Be & Cheery in Asia Pacific Foods. As a result, GAAP operating profit increased 125% to $4.02 billion and GAAP EPS increased 137% to $2.18. Core results remove those distortions as well as restructuring, acquisition-related and mark-to-market items; core EPS was $2.20 versus $2.12 last year.
Cash generation improved year over year but remained modest relative to earnings. Year-to-date operating cash flow was $2.37 billion versus $996 million a year ago, while capital spending was $1.27 billion versus $1.51 billion; adding $71 million of asset-sale proceeds implies free cash flow of approximately $1.17 billion. PepsiCo paid $3.91 billion in dividends and repurchased $479 million of stock during the first 24 weeks. Cash and equivalents were $10.25 billion at June 13, while short-term and long-term debt totaled $53.21 billion.
PepsiCo left its fiscal 2026 framework unchanged. The guidance assumes continued portfolio investment and productivity work, including affordability initiatives, brand restaging and innovation in functional and permissible offerings.
