PepsiCo Tops Q3 Estimates As International Growth Accelerates – CFO Sees North America Core Operating Margin Facing Pressure In Q4

• PepsiCo reported Q3 core EPS of $2.34 and revenue of $25.27 billion, topping FiscalAI estimates of about $2.30 and $24.95 billion, respectively.
• The company lowered its FY2026 core constant-currency EPS growth outlook to 1%-2%, from the low end of its previous 4%-6% range.
• CFO Steve Schmitt expects North America’s core operating margin to remain under pressure in Q4.

PepsiCo (PEP) was in focus on Thursday after the beverage and snacks giant delivered a better-than-expected third quarter, with revenue and core earnings per share topping estimates, even as the company lowered its full-year profit outlook amid continued pressure in North America.

PEP shares traded about 1% higher in premarket trading on Thursday at the time of writing.

The company reported third-quarter core earnings per share (EPS) of $2.34, versus analysts’ expectations of about $2.30, while revenue rose 5.6% year-over-year to $25.27 billion, ahead of the approximately $24.95 billion estimate compiled by FiscalAI.

PepsiCo Cuts FY2026 Profit Outlook

PepsiCo lowered its fiscal 2026 core constant-currency EPS growth outlook to 1%-2%, compared with its previous guidance at the low end of a 4%-6% range.

The company now expects core EPS growth of 2.5%-3.5%, down from its earlier forecast of 5%-7%. PepsiCo expects organic revenue growth of approximately 3% for the year, compared with its previous range of 2% to 4%, while net revenue growth is now expected to be approximately 6%, versus the prior range of 4% to 6%.

PEP’s Management Take On Operating Margin

PepsiCo CEO Ramon Laguarta said the company plans to build on the strength of its international business while improving performance in North America through investments in innovation, brand building and marketplace execution.

“Additional structural cost reduction actions are being identified and will be implemented in the coming months,” Laguarta said, adding that the measures are intended to help fund investments aimed at accelerating organic revenue growth and mitigate rising input-cost inflation.

PepsiCo said its North America convenient foods business saw sequential improvement in organic revenue trends, supported by savory-snack volume growth and improved volume market share. Its North America beverages business reported 5% revenue growth, primarily reflecting acquisitions made in 2025.

CFO Steve Schmitt said North America’s core operating margin performance is expected to remain under pressure in the fourth quarter. He said PepsiCo aims to partially mitigate that pressure through productivity savings, operational excellence, and tight cost management.

Organic Growth Accelerates

PepsiCo’s organic revenue growth accelerated to 3.1% in the third quarter, compared with 2.7% a year earlier.

Global beverage organic volume increased 3%, while global convenient foods organic volume rose 1%. Excluding certain commodity-oriented businesses in South Africa, convenient foods volume increased 4%, its highest growth rate since 2021.

Core operating profit increased 3%, while core operating margin declined 35 basis points to 16.9%. PepsiCo said core operating profit reflected productivity savings, effective net pricing, and a 4-percentage-point favorable impact from tariff refunds, partly offset by certain operating cost increases and higher advertising and marketing expenses.

International Business Delivers Stronger Growth

PepsiCo’s international operations remained a key contributor to the quarter, with international organic revenue growth accelerating to 8%, its highest level since the first quarter of 2024.

The company said its international businesses delivered strong net revenue growth, supported by organic volume gains in Asia Pacific Foods, International Beverages Franchise and Latin America Foods.

On a year-to-date basis, PepsiCo’s international businesses accounted for 41% of total company net revenue and 45% of core segment operating profit.

How Retail Views PEP

Retail sentiment on Stocktwits shifted from ‘Bullish’ to ‘Extremely Bullish’, with message volumes rated ‘High’ over the past 24 hours. PEP was also among the trending tickers on Stocktwits at the time of writing.

PEP shares have dropped nearly 14% year-to-date.

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