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PepsiCo Q4 Earnings & Revenues Beat on Strength Across Segments
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Key Takeaways
PEP delivered Q4 EPS and revenue beats, with y/y growth driven by pricing and segment resilience.
PEP saw revenue growth across all segments, led by EMEA, LatAm Foods and steady beverage momentum.
PEP expects 2-4% organic revenue growth for 2026, supported by innovation, productivity and margin expansion.
PepsiCo, Inc. (PEP - Free Report) has reported robust fourth-quarter 2025 results, wherein revenues and earnings per share (EPS) beat the Zacks Consensus Estimate and improved year over year. The company witnessed accelerated net revenue growth from the previous quarter, reflecting its ability to navigate a challenging environment.
PepsiCo delivered a strong fourth-quarter performance, supported by steady momentum in its North America beverage business and resilient growth across the international markets. The company benefited from improving trends in its global convenient foods segment and better profitability within PepsiCo Foods North America. Continued innovation, cost optimization and portfolio reshaping helped drive solid results despite ongoing supply-chain and inflationary pressures.
PEP’s fourth-quarter core EPS of $2.26 beat the Zacks Consensus Estimate of $2.24 and improved 15.3% year over year. In constant currency, core earnings advanced 11% from the year-ago period. The company reported EPS of $1.85 per share, which surged 68% year over year in the fourth quarter. Foreign currency impacted EPS by 5%.
Shares of the Zacks Rank #3 (Hold) company have gained 14% in the past three months compared with the industry’s 9.2% growth.
Image Source: Zacks Investment Research
Peek Into PEP’s Q4 Details
Net revenues of $29.34 million rose 5.6% year over year and marginally beat the Zacks Consensus Estimate of $29 billion. The unit volume was down 2% for the convenient food business and up 1% for the beverage business. Foreign currency impacted revenues by 2%, and acquisitions and divestitures hurt revenues by 1%. On an organic basis, revenues grew 2.1% year over year. The rise was driven by a 4.5% increase in effective net pricing, offset by a 2% decline in the organic volume.
Our model predicted year-over-year organic revenue growth of 2% for the fourth quarter, with a 5% gain from the price/mix and a 3% decline in volume.
On a consolidated basis, the reported gross profit declined 7% year over year to $15.6 billion. The core gross profit increased 5.5% year over year to $15.7 million. The reported gross margin expanded 60 bps to 53.2%, whereas the core gross margin fell 10 bps year over year to 53.6%.
We anticipated the core gross margin to expand 30 bps year over year to 54% in the fourth quarter. In dollar terms, core gross profit was expected to increase 4% year over year.
PepsiCo’s reported operating income of $3.6 billion rose 58% year over year. The core operating income rose 17.7% year over year to $4.1 billion. The core constant-currency operating income increased 13% year over year. The operating margin expanded significantly to 12.1% from 8.1% in the year-ago quarter on a reported basis. On an adjusted basis, the core operating margin expanded 140 bps year over year to 13.9%.
Our model predicted core SG&A expenses of $11.5 billion, which indicated year-over-year growth of 0.2%. As a percentage of revenues, core SG&A expenses were anticipated to be 40%, suggesting a 130-bps decline from the prior-year quarter.
We expected a core operating margin of 14%, implying a 150-bps increase from the year-ago quarter’s actual.
PEP’s Segmental Details
On a reported basis, PepsiCo witnessed revenue growth across all of its operating segments. Revenues on a reported basis rose 1.5% year over year in PFNA, 4% in PBNA, 3.5% in IB Franchise, 12% in EMEA, 11% in LatAm Foods and 5% in Asia Pacific Foods.
PEP’s organic revenues improved across most operating segments, except for PFNA. Organic revenues rose 2% each for PBNA and IB Franchise, 5% each for EMEA and LatAm Foods, and 4% for Asia Pacific Foods. However, organic revenues declined 1% for the PFNA segment.
Financials of PepsiCo Show Stability
PEP ended 2025 with cash and cash equivalents of $9.2 billion, long-term debt of $42.3 billion, and shareholders’ equity (excluding non-controlling interest) of $20.4 billion.
Net cash provided by operating activities was $12.1 billion as of Dec. 27, 2025, compared with $12.5 billion as of Dec. 28, 2024.
Concurrent with the earnings release, PepsiCo announced a 4% increase in its annualized dividend, raising it to $5.92 per share from $5.69, effective with the dividend expected to be paid out in June 2026. This marks the company’s 54th consecutive year of dividend growth, underscoring its commitment to returning cash to shareholders. The company also authorized a share repurchase program of up to $10 billion of PepsiCo’s common stock, through Feb. 28, 2030.
PEP’s Outlook for 2026
Looking into 2026, PepsiCo is focused on enhancing competitiveness and improving overall financial performance to accelerate annual growth and expand core operating margins relative to 2025. These efforts are supported by a comprehensive portfolio refresh and a strong pipeline of innovation.
The company has restaged its four global brands, including Lay’s, Tostitos, Gatorade and Quaker, with an emphasis on improved quality perception, refreshed visuals and marketing, and simpler ingredient formulations. At the same time, the company is expanding its innovation slate to include emerging and functional offerings, targeting consumer demand for hydration, whole grains, fewer artificial ingredients, and higher protein and fiber content. To further strengthen its market position, the company has implemented sharper affordability initiatives at PepsiCo Foods North America to enhance competitiveness and increase purchase frequency.
Productivity savings are expected to play a critical role in funding these commercial initiatives throughout 2026. The company plans to accelerate its global productivity initiatives by expanding automation, digitalization and simplification efforts across the organization. These actions are designed to unlock efficiency gains and support a record year of productivity savings in 2026. Management targets at least 100 bps of cumulative core operating margin expansion in the next three years, reinforcing its focus on disciplined execution and sustained profitability.
For 2026, management remains encouraged by the improving trajectory of PepsiCo Foods North America and expects the business to deliver organic revenue growth and core operating margin expansion. PepsiCo Beverages North America is anticipated to build further momentum, positioning it for a sixth consecutive year of core operating margin expansion. Meanwhile, PepsiCo’s International business is expected to remain resilient and continue to perform well, supported by diversified geographies and disciplined execution across markets.
As a result, PepsiCo expects to deliver organic revenue growth of 2-4% in 2026. Additionally, management is targeting the high end of this range in the second half of 2026, supported by stepped-up innovation, improved shelf presence and ongoing portfolio reshaping initiatives. The core operating margin is projected to expand as net revenue growth and record productivity savings more than offset planned incremental investments in advertising and marketing, as well as operating cost inflation.
Core constant-currency EPS is expected to increase 4-6%, with core EPS growth of 5-7%. Based on the current rates, PEP expects currency translation to provide a tailwind of approximately 1 percentage point on both net revenues and core EPS growth in 2026. Acquisitions completed in 2025, net of divestitures, are expected to add 1 percentage point to reported net revenue growth in 2026, providing a modest but meaningful lift to the top line. The company expects a core effective tax rate of 22% for 2026.
The company continues to expect capital spending to remain below 5% of net revenues, while targeting a free cash flow conversion ratio of at least 80%. This outlook includes a final tax payment of $1 billion related to the Tax Cuts and Jobs Act of 2017. Free cash flow conversion is expected to improve further, reaching at least 90% in 2027.
PEP has been committed to rewarding its shareholders through dividends and share buybacks. It expects to return total cash of $8.9 billion to shareholders in 2026, including $7.9 billion of dividends and $1 billion of share repurchases.
The Zacks Consensus Estimate for Monster Beverage’s current financial-year sales and earnings indicates growth of 9.5% and 22.8%, respectively, from the prior-year reported levels. MNST delivered a trailing four-quarter earnings surprise of 5.5%, on average.
Carlsberg (CABGY - Free Report) is a brewing company and has operations in Northern and Western Europe, Eastern Europe, and Asia. The company currently has a Zacks Rank #2.
The Zacks Consensus Estimate for Carlsberg’s 2025 sales and earnings implies growth of 33.4% and 23.3%, respectively, from the previous year’s reported numbers.
J & J Snack Foods Corporation (JJSF - Free Report) is an American manufacturer, marketer and distributor of branded niche snack foods and frozen beverages for the food service and retail supermarket industries. It carries a Zacks Rank #2 at present.
The Zacks Consensus Estimate for J & J Snack Foods’ current fiscal-year sales and earnings implies increases of 1.7% and 4.5%, respectively, from the prior-year reported levels. JJSF delivered a trailing four-quarter negative earnings surprise of 8%, on average.
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PepsiCo Q4 Earnings & Revenues Beat on Strength Across Segments
Key Takeaways
PepsiCo, Inc. (PEP - Free Report) has reported robust fourth-quarter 2025 results, wherein revenues and earnings per share (EPS) beat the Zacks Consensus Estimate and improved year over year. The company witnessed accelerated net revenue growth from the previous quarter, reflecting its ability to navigate a challenging environment.
PepsiCo delivered a strong fourth-quarter performance, supported by steady momentum in its North America beverage business and resilient growth across the international markets. The company benefited from improving trends in its global convenient foods segment and better profitability within PepsiCo Foods North America. Continued innovation, cost optimization and portfolio reshaping helped drive solid results despite ongoing supply-chain and inflationary pressures.
PEP’s fourth-quarter core EPS of $2.26 beat the Zacks Consensus Estimate of $2.24 and improved 15.3% year over year. In constant currency, core earnings advanced 11% from the year-ago period. The company reported EPS of $1.85 per share, which surged 68% year over year in the fourth quarter. Foreign currency impacted EPS by 5%.
Shares of the Zacks Rank #3 (Hold) company have gained 14% in the past three months compared with the industry’s 9.2% growth.
Image Source: Zacks Investment Research
Peek Into PEP’s Q4 Details
Net revenues of $29.34 million rose 5.6% year over year and marginally beat the Zacks Consensus Estimate of $29 billion. The unit volume was down 2% for the convenient food business and up 1% for the beverage business. Foreign currency impacted revenues by 2%, and acquisitions and divestitures hurt revenues by 1%. On an organic basis, revenues grew 2.1% year over year. The rise was driven by a 4.5% increase in effective net pricing, offset by a 2% decline in the organic volume.
Our model predicted year-over-year organic revenue growth of 2% for the fourth quarter, with a 5% gain from the price/mix and a 3% decline in volume.
On a consolidated basis, the reported gross profit declined 7% year over year to $15.6 billion. The core gross profit increased 5.5% year over year to $15.7 million. The reported gross margin expanded 60 bps to 53.2%, whereas the core gross margin fell 10 bps year over year to 53.6%.
We anticipated the core gross margin to expand 30 bps year over year to 54% in the fourth quarter. In dollar terms, core gross profit was expected to increase 4% year over year.
PepsiCo, Inc. Price, Consensus and EPS Surprise
PepsiCo, Inc. price-consensus-eps-surprise-chart | PepsiCo, Inc. Quote
PepsiCo’s reported operating income of $3.6 billion rose 58% year over year. The core operating income rose 17.7% year over year to $4.1 billion. The core constant-currency operating income increased 13% year over year. The operating margin expanded significantly to 12.1% from 8.1% in the year-ago quarter on a reported basis. On an adjusted basis, the core operating margin expanded 140 bps year over year to 13.9%.
Our model predicted core SG&A expenses of $11.5 billion, which indicated year-over-year growth of 0.2%. As a percentage of revenues, core SG&A expenses were anticipated to be 40%, suggesting a 130-bps decline from the prior-year quarter.
We expected a core operating margin of 14%, implying a 150-bps increase from the year-ago quarter’s actual.
PEP’s Segmental Details
On a reported basis, PepsiCo witnessed revenue growth across all of its operating segments. Revenues on a reported basis rose 1.5% year over year in PFNA, 4% in PBNA, 3.5% in IB Franchise, 12% in EMEA, 11% in LatAm Foods and 5% in Asia Pacific Foods.
PEP’s organic revenues improved across most operating segments, except for PFNA. Organic revenues rose 2% each for PBNA and IB Franchise, 5% each for EMEA and LatAm Foods, and 4% for Asia Pacific Foods. However, organic revenues declined 1% for the PFNA segment.
Financials of PepsiCo Show Stability
PEP ended 2025 with cash and cash equivalents of $9.2 billion, long-term debt of $42.3 billion, and shareholders’ equity (excluding non-controlling interest) of $20.4 billion.
Net cash provided by operating activities was $12.1 billion as of Dec. 27, 2025, compared with $12.5 billion as of Dec. 28, 2024.
Concurrent with the earnings release, PepsiCo announced a 4% increase in its annualized dividend, raising it to $5.92 per share from $5.69, effective with the dividend expected to be paid out in June 2026. This marks the company’s 54th consecutive year of dividend growth, underscoring its commitment to returning cash to shareholders. The company also authorized a share repurchase program of up to $10 billion of PepsiCo’s common stock, through Feb. 28, 2030.
PEP’s Outlook for 2026
Looking into 2026, PepsiCo is focused on enhancing competitiveness and improving overall financial performance to accelerate annual growth and expand core operating margins relative to 2025. These efforts are supported by a comprehensive portfolio refresh and a strong pipeline of innovation.
The company has restaged its four global brands, including Lay’s, Tostitos, Gatorade and Quaker, with an emphasis on improved quality perception, refreshed visuals and marketing, and simpler ingredient formulations. At the same time, the company is expanding its innovation slate to include emerging and functional offerings, targeting consumer demand for hydration, whole grains, fewer artificial ingredients, and higher protein and fiber content. To further strengthen its market position, the company has implemented sharper affordability initiatives at PepsiCo Foods North America to enhance competitiveness and increase purchase frequency.
Productivity savings are expected to play a critical role in funding these commercial initiatives throughout 2026. The company plans to accelerate its global productivity initiatives by expanding automation, digitalization and simplification efforts across the organization. These actions are designed to unlock efficiency gains and support a record year of productivity savings in 2026. Management targets at least 100 bps of cumulative core operating margin expansion in the next three years, reinforcing its focus on disciplined execution and sustained profitability.
For 2026, management remains encouraged by the improving trajectory of PepsiCo Foods North America and expects the business to deliver organic revenue growth and core operating margin expansion. PepsiCo Beverages North America is anticipated to build further momentum, positioning it for a sixth consecutive year of core operating margin expansion. Meanwhile, PepsiCo’s International business is expected to remain resilient and continue to perform well, supported by diversified geographies and disciplined execution across markets.
As a result, PepsiCo expects to deliver organic revenue growth of 2-4% in 2026. Additionally, management is targeting the high end of this range in the second half of 2026, supported by stepped-up innovation, improved shelf presence and ongoing portfolio reshaping initiatives. The core operating margin is projected to expand as net revenue growth and record productivity savings more than offset planned incremental investments in advertising and marketing, as well as operating cost inflation.
Core constant-currency EPS is expected to increase 4-6%, with core EPS growth of 5-7%. Based on the current rates, PEP expects currency translation to provide a tailwind of approximately 1 percentage point on both net revenues and core EPS growth in 2026. Acquisitions completed in 2025, net of divestitures, are expected to add 1 percentage point to reported net revenue growth in 2026, providing a modest but meaningful lift to the top line. The company expects a core effective tax rate of 22% for 2026.
The company continues to expect capital spending to remain below 5% of net revenues, while targeting a free cash flow conversion ratio of at least 80%. This outlook includes a final tax payment of $1 billion related to the Tax Cuts and Jobs Act of 2017. Free cash flow conversion is expected to improve further, reaching at least 90% in 2027.
PEP has been committed to rewarding its shareholders through dividends and share buybacks. It expects to return total cash of $8.9 billion to shareholders in 2026, including $7.9 billion of dividends and $1 billion of share repurchases.
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