- Price
- $126.72 → $123.73(−2.4%)
- Discount
- 25.0% → 26.8%(+1.8 pts)
- Next earnings
- 2026-10-08 → 2027-01-08
- Next earnings is estimate
- No → Yes
- Thesis
- The market's main worry about PepsiCo is North America, its biggest profit engine, which has swung between weak and improving within the same year. Price cuts on Frito-Lay snacks briefly restoredbrought back small volume growth in 2026, but they also cut prices and profit. In the firstthird quarter of 2026, PepsiCo Foods North America volume grew 0. But both snacks and drinks softened again5%, but its core operating profit fell 12% in the second quarterconstant currency. North America beverage volume fell 3%. Management then cut its 2026 core constant currency EPS growth guidance to 1% to 2%. It blames a weakerweak US consumer facing high gas prices and inflation, not just a pricing missteprising input costs. ThatThis weakness is why activist investor Elliott Management built a large stake and pushed for change. PepsiCo settled with Elliott by promising record cost savings, a smaller US product lineup, and further snack price cuts. Now it plans more structural cost cuts, and reports say it will raise some prices. For the gap to close, these moves need to lift North America volume must stay flat or grow while prices go up. Core operating margin must also needsstart to expand bytoward management's target of at least 100 basis points, hundredths of a percentage point, over three years, as management has targeted. North America demand must also needs to hold up even if the wider US consumer stays under pressure. The next test comes at third-quartertests are the Q4 2026 earnings on October 8results with the 2027 guidance in early 2027, 2026. Investors will look for signsand the North America recovery is back on trackQ1 2027 results, which show if price increases cost volume. If volume holds and margins improve through late 2026 and intoduring 2027, the gap can close within severalover the next four to six quarters. If North America stays weak, the softness may reflect a real, lasting risk rather than a temporary mispricingmarket's lower view of PepsiCo's earnings power can be correct.
- Balance sheet
- PepsiCo funds itself mostly with unsecured notes of the parent company in US dollars and euros, plus a large commercial paper program. It owns most of its North American bottling plants and trucks, so it needs more capital than a franchise model. At June 13September 5, 2026, debt was $5351.29 billion: $42.67 billion of long-term debt and $109.62 billion of short-term debt. The short-term debt included $64.18 billion of commercial paper. Cash and short-term investments were $1011.72 billion, and 2120% of the cash was in Russia. Net debt was about $40.7 billion, down from about $42.5 billion at June 13, or about 22026.3 times trailing EBITDA In the first 36 weeks of about2026, operating profit of $1811.65 billion. Trailing EBIT covered net interest expense and other of $0.77 billion about 1315 times. Moody's rates PepsiCo A1 and S&P rates it A+, both with a stable outlook. Two undrawn $5.0 billion revolving credit facilities back the commercial paper: one runs to May 2031 and one to May 2027. If a rating falls to A2 or A on credit watch, some derivative counterparties can ask for full collateral. In the first 36 weeks of 2026, free cash flow was about $5.9 billion, and PepsiCo paid $5.9 billion of dividends and $0.7 billion of buybacks. PepsiCo still plans to return about $8.9 billion in 2026: about $7.9 billion as dividends and $1.0 billion as buybacks. This is close to its trailing free cash flow of about $9.3 billion, so theThe dividend takes most of the free cash flow. MoreLower 2026 earnings guidance leaves less room, so more weakness in North America would make PepsiCo borrow more or slow buybacks.
As of 2026-0609-1305.
- Checkpoints
- Oct 8, 2026: Q3 2026 earnings: North America volume and margin. PendingFailed. Watch: Flat or positive North America volume and core operating margin up year over year pass; another volume drop in snacks and drinks with margin down fails.
Feb Outcome: Snack volume grew 0.5%, but beverage volume fell 3%, core operating margin fell 35 basis points, and PepsiCo cut its 2026 EPS growth guidance to 1% to 2%.
Jan 8, 2027 (estimate): Q4 2026 results and 2027 guidance. Pending. Watch: 2026 core constant currency EPS growth inside the 4new 1% to 62% guidance and a 2027 plan with margin growth pass; another guidance cut or a 2027 outlook that cuts margin targets fails.
Apr 2027 (estimate): Q1 2027 earnings: price increases versus volume. Pending. Watch: Price increases that hold North America volume steady pass; volume losses that cancel the price gains fail.
- Recent events
- 2026-10-08: PepsiCo reported Q3 2026 results. Net revenue rose 5.6% to $25.27 billion, and organic revenue rose 3.1%. Core EPS was $2.34, up 2%. Core operating margin fell 35 basis points to 16.9%. Tariff refunds added 4 percentage points to core operating profit growth. PepsiCo Foods North America organic revenue was flat: volume grew 0.5% and net pricing fell 1%. Its core operating profit fell 12% in constant currency. North America beverage organic volume fell 3%. International segments grew organic revenue 6% to 9%.
2026-10-08: PepsiCo cut its 2026 guidance for core constant currency EPS growth to 1% to 2%, from the low end of 4% to 6%. It now expects organic revenue growth of about 3% and still plans to return $8.9 billion to shareholders. The CEO said that new structural cost cuts will start in the coming months, to fund investment and offset rising input costs.
2026-09-24: Bloomberg reported that PepsiCo plans to raise prices on some snacks and drinks. Its earlier price cuts did not grow sales.
2026-09-17: PepsiCo's board elected Joaquin Duato, Chairman and CEO of Johnson & Johnson, as an independent director effective December 1, 2026.
2026-07-09: PepsiCo reported Q2 2026 results: net revenue of $24.18 billion, up 6.4%, with organic revenue up 2.4%. Adjusted EPS was $2.20, a cent below estimates. Core operating margin contracted 40 basis points to 16.8%. North America beverage volume fell 4% and North America foods volume was flat; management said North America was softer than it had anticipated.
2026-04-16: PepsiCo reported Q1 2026 results: net revenue of $19.4 billion, up 8.5%, with organic revenue up 2.6% and EPS of $1.61, ahead of estimates. PepsiCo Foods North America returned to volume growth for the first time in over two years after February 2026 price cuts of up to 15% on Lay's, Doritos, Tostitos, and Cheetos.
2026-02-03: PepsiCo reported Q4 and full-year 2025 results and gave 2026 guidance of 2-4% organic revenue growth and 4-6% core constant-currency EPS growth. The board raised the annualized dividend 4% to $5.92 per share, its 54th straight annual increase, and authorized a new $10 billion share buyback program running through February 2030.
2025-12-08: PepsiCo reached an agreement with activist investor Elliott Management. It committed to a review of its supply chain, record 2026 productivity savings, cutting its US product lineup by about 20%, and further price reductions on snacks, but said a full refranchising of its North America beverage bottling operation was not under consideration.
2025-09-02: Elliott Investment Management disclosed a roughly $4 billion stake in PepsiCo, calling the company a 'dramatic underperformer' and pushing it to refranchise its company-owned North America bottling network and review underperforming food assets.
2025-05-19: PepsiCo completed its acquisition of poppi, a prebiotic soda brand, for $1.95 billion in cash plus contingent consideration tied to performance milestones.