PEP changes
Pick any two versions below to diff them.
- Price
- $126.72 → $123.73(−2.4%)
- Next earnings
- Oct 8, 2026 → Jan 8, 2027
- Next earnings is estimate
- No → Yes
- Thesis
- The market's main worry about PepsiCo is North America, its biggest profit removed: engine, which has swung between weak and improving within the same year. added: engine. Price cuts on Frito-Lay snacks removed: briefly restored added: brought back small volume growth in added: 2026, but they also cut prices and profit. In the removed: first added: third quarter of removed: 2026. But both snacks and drinks softened again added: 2026, PepsiCo Foods North America volume grew 0.5%, but its core operating profit fell 12% in removed: the second quarter. added: constant currency. North America beverage volume fell 3%. Management added: then cut its 2026 core constant currency EPS growth guidance to 1% to 2%. It blames a removed: weaker added: weak US consumer removed: facing high gas prices and removed: inflation, not just a pricing misstep. That added: rising input costs. This weakness is why activist investor Elliott Management built a large removed: stake and pushed for change. added: stake. PepsiCo settled with Elliott by promising record cost savings, a smaller US product removed: lineup, added: lineup and removed: further snack price cuts. added: Now it plans more structural cost cuts, and reports say it will raise some prices. For the gap to close, removed: these moves need to lift North America removed: volume. added: volume must stay flat or grow while prices go up. Core operating margin added: must also removed: needs added: start to expand removed: by added: toward management's target of at least 100 basis points, hundredths of a percentage point, over three removed: years, as management has targeted. added: years. North America demand added: must also removed: needs to hold up removed: even if the removed: wider US consumer stays under pressure. The next removed: test comes at third-quarter added: tests are the Q4 2026 removed: earnings on October 8, 2026. Investors will look for signs added: results with the removed: North America recovery is back on track. added: 2027 guidance in early 2027, and the Q1 2027 results, which show if price increases cost volume. If volume added: holds and margins improve removed: through late 2026 and into added: during 2027, the gap can close removed: within several added: over the next four to six quarters. If North America stays weak, the removed: softness may reflect a real, lasting risk rather than a temporary mispricing. added: market'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 removed: June 13, added: September 5, 2026, debt was removed: $53.2 added: $51.9 billion: removed: $42.6 added: $42.7 billion of long-term debt and removed: $10.6 added: $9.2 billion of short-term debt. The short-term debt included removed: $6.1 added: $4.8 billion of commercial paper. Cash and short-term investments were removed: $10.7 added: $11.2 billion, and removed: 21% added: 20% of the cash was in Russia. Net debt was about removed: $42.5 added: $40.7 billion, removed: or added: down from about removed: 2.3 times trailing EBITDA added: $42.5 billion at June 13, 2026. In the first 36 weeks of removed: about $18.6 billion. Trailing EBIT added: 2026, operating profit of $11.5 billion covered added: net interest expense added: and other of $0.77 billion about removed: 13 added: 15 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. added: In the first 36 weeks of 2026, free cash flow was about $5.9 billion, and PepsiCo added: 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. removed: This is close to its trailing free cash flow of about $9.3 billion, so the added: The dividend takes most of the removed: cash. More added: free cash flow. Lower 2026 earnings guidance leaves less room, so more weakness in North America would make PepsiCo borrow more or slow buybacks. As of removed: Jun 13, added: Sep 5, 2026.
- Checkpoints
- Oct 8, 2026: Q3 2026 earnings: North America volume and margin. removed: Pending. added: Failed. 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. removed: Feb added: 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 added: constant currency EPS growth inside the removed: 4% added: new 1% to removed: 6% added: 2% guidance and a 2027 plan with margin growth pass; added: 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
- added: Oct 8, 2026: 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%. Oct 8, 2026: 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. Sep 24, 2026: Bloomberg reported that PepsiCo plans to raise prices on some snacks and drinks. Its earlier price cuts did not grow sales. Sep 17, 2026: PepsiCo's board elected Joaquin Duato, Chairman and CEO of Johnson & Johnson, as an independent director effective December 1, 2026. Jul 9, 2026: 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. Apr 16, 2026: 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. Feb 3, 2026: 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. Dec 8, 2025: 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. Sep 2, 2025: 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. May 19, 2025: PepsiCo completed its acquisition of poppi, a prebiotic soda brand, for $1.95 billion in cash plus contingent consideration tied to performance milestones.