PepsiCo, Inc.
PEP · NASDAQ-GS
Next quarter
Expected to report Feb 2, 2027 — estimated from last year’s reporting date.
Consensus is $2.24 EPS for Dec 2026 across 8 estimates, ranging $2.20 to $2.30.
PEP Sep 2026
- 2.18%
- $2.29
- $2.34
- —
- $25.27B
Reported results
- $25.27B
- 54.42%
- $4.26B
- 16.86%
- $3.05B
- $2.23
Highlights
- Core EPS: $2.34 beat the $2.29 consensus by $0.05, or 2.18%, and rose 2% year over year; GAAP diluted EPS was $2.23, up 17%.
- Guidance cut: PepsiCo now expects fiscal 2026 core constant-currency EPS growth of 1%–2%, down from the prior low end of 4%–6%, and core EPS growth of 2.5%–3.5%, versus the prior low end of 5%–7%.
- Revenue growth: Net revenue increased 5.6% to $25.27 billion, including 3.1% organic growth; management said organic growth was the fastest since Q4 2023 and volume-led.
- International: Organic revenue grew 8%; management cited volume growth across several international food and beverage businesses, and said international already represented 45% of year-to-date profit.
- North America: Snack volume performance improved to low-single-digit growth from a low-single-digit decline last year, but management remains dissatisfied with North American beverages, particularly soft drinks.
- Underlying profit: Core operating profit rose 3% to $4.28 billion, while core operating margin contracted 35 basis points to 16.9%; higher costs and marketing partly offset productivity, pricing and tariff refunds.
- GAAP versus core: Reported operating profit rose 19% to $4.26 billion and reported margin expanded 195 basis points, helped by acquisition/divestiture items and commodity mark-to-market gains.
- Full-year sales outlook: Organic revenue guidance is now approximately 3% and reported net revenue approximately 6%, compared with prior ranges of 2%–4% and 4%–6%, respectively.
Analysis
PepsiCo delivered a volume-led improvement in sales and a modest core EPS beat, but the quarter’s defining news was a sharp reduction in its full-year earnings outlook. Core EPS of $2.34 topped the $2.29 consensus by 2.18% and increased 2% year over year; GAAP diluted EPS was $2.23, up 17% from $1.90. Revenue rose 5.6% year over year to $25.27 billion, with organic revenue up 3.1%. Versus Q2, revenue increased from $24.18 billion, operating income from $4.02 billion and diluted EPS from $2.18.
International operations and improving North American snack volumes supported the top line, while North American beverages remained a weak spot. Core operating profit grew only 3% and core margin fell 35 basis points, despite the benefit of productivity, pricing and tariff refunds. Management pointed to rising input costs as hedges roll off, adverse mix and continued investment in advertising as pressures on margins. PepsiCo lowered its fiscal 2026 core constant-currency EPS growth outlook to 1%–2% from the prior low end of 4%–6%; core EPS growth is now expected at 2.5%–3.5%, versus the prior low end of 5%–7%. Revenue expectations were maintained or nudged higher, highlighting the gap between sales momentum and earnings conversion.
Guidance reset
PepsiCo raised the midpoint of its sales outlook while materially reducing earnings expectations. Management said the revision reflects weaker-than-expected margin performance, with inflation and mix pressuring results as prior commodity hedges expire. It expects to provide a fuller view of 2027 in February.
- Organic revenue: Approximately 3% growth, replacing a prior range of 2%–4%.
- Net revenue: Approximately 6% growth, versus the prior 4%–6% range; foreign-exchange contribution is now estimated at approximately 1.5%, and acquisitions net of divestitures at approximately 1.5%.
- Core EPS: Growth of 2.5%–3.5%, down from the prior low end of 5%–7%; core constant-currency EPS growth is now 1%–2%, versus the prior low end of 4%–6%.
- Other assumptions: Core effective tax rate is now approximately 21%, versus approximately 22% previously. Planned shareholder returns remain $8.9 billion, comprising $7.9 billion of dividends and $1.0 billion of repurchases.
Revenue and volumes
Third-quarter net revenue increased 5.6% to $25.27 billion, with 3.1% organic growth. The reported increase also included a 1.7-percentage-point net contribution from acquisitions and divestitures and a 0.7-point benefit from foreign-exchange translation. Management described the organic growth acceleration as volume-led and as the fastest rate since Q4 2023. Sequentially, revenue rose from $24.18 billion in Q2.
- Volume: Global beverage volume increased 3% and global food volume 1%; management said global snack volume was up 4%.
- Year to date: Net revenue increased 6.7% to $68.90 billion, while organic revenue grew 2.7%.
International strength
International was the clearest source of broad-based strength: organic revenue grew 8% in the quarter, supported by volume growth in Asia Pacific Foods, the International Beverages Franchise and Latin America Foods. Management characterized the momentum as structural rather than simply a benefit from weather or events, and noted that international accounted for 45% of year-to-date profit. Year-to-date organic revenue growth was 3%, with strong reported growth across the international segments.
- Quarter performance: Reported revenue increased 8% in both the International Beverages Franchise and EMEA, 14% in Latin America Foods and 10% in Asia Pacific Foods.
- Year-to-date performance: Reported revenue increased 10% in the International Beverages Franchise, 11% in EMEA and 15% in Latin America Foods; Asia Pacific Foods increased 11%.
North America execution
North American foods improved sequentially, but performance remained uneven across the region. Management said snack volume moved from low-single-digit decline last year to low-single-digit growth this year, with volume share gains over multiple quarters; it also acknowledged that growth was below initial expectations, reflecting the consumer environment and execution. In beverages, management singled out soft drinks as an area where PepsiCo is not competing well, despite better performance in hydration and energy.
- Foods: The company cited savory-snack volume growth and improved volume share, while lower effective net pricing offset some of the benefit. Affordability, innovation and investment in newer platforms remain priorities.
- Beverages: North American beverage revenue grew 5%, primarily reflecting 2025 acquisitions; management said the business decelerated and is focusing on soft-drink brand investment and better marketplace execution.
- Operating model: PepsiCo is continuing its U.S. food-and-beverage integration in selected areas while also considering faster refranchising where local partners could improve execution and economics.
Margins and costs
The headline expansion in GAAP operating margin did not reflect the underlying trend: reported operating profit benefited from acquisition- and divestiture-related items and commodity mark-to-market gains. On a core basis, operating profit rose 3% to $4.28 billion, while margin slipped 35 basis points to 16.9%. Productivity savings and effective pricing helped, but higher operating costs and increased advertising and marketing spending offset part of those gains. Management also cited a 4-percentage-point contribution to core operating-profit growth from tariff refunds, a benefit that will not recur at the same level.
- Reported results: Operating profit increased 19% to $4.26 billion; operating margin rose 195 basis points to 16.9%.
- Core results: Core operating profit increased 3%; core operating margin declined from 17.3% to 16.9%.
- Cost response: Input-cost inflation is rising as hedges covering roughly 6–12 months roll off. PepsiCo plans additional structural cost reductions and revenue-management actions to help fund growth investment and mitigate pressure.
