PepsiCo third-quarter EPS rises 17% to $2.23 and core EPS outlook is cut
Core EPS rose 2% to $2.34, and fiscal 2026 core EPS growth guidance was lowered to +2.5% to +3.5%.
Key takeaways
- PepsiCo, Inc. (PEP) reported third-quarter 2026 net revenue of $25.3 billion, up 5.6% from a year earlier, and earnings per share of $2.23, up 17%, in a release dated Oct. 8. Core EPS rose 2% to $2.34. It lowered its fiscal 2026 core EPS growth guidance to +2.5% to +3.5%, from a low end of +5% to +7%.
PepsiCo, Inc. (PEP) reported third-quarter 2026 net revenue of $25.3 billion, up 5.6% from a year earlier, and earnings per share of $2.23, up 17%, the company said in a press release attached to a regulatory filing.
The results cover the 12 weeks ended Sept. 5, 2026. Year-to-date figures cover the 36 weeks.
Here's how the company did:
- Net revenue: $25,274 million vs. $23,937 million a year earlier
- Earnings per share: $2.23 vs. $1.90 a year earlier
- Core earnings per share: $2.34 vs. $2.29 a year earlier
- Operating profit: $4,260 million vs. $3,569 million a year earlier
Organic revenue, which strips out currency, acquisitions and divestitures, rose 3.1%. Foreign exchange translation added 0.7 percentage point to net revenue growth, and acquisitions and divestitures added 1.7 points.
“Our third-quarter results featured strong net revenue growth, an acceleration in organic revenue growth with organic volume growth across both global beverages and convenient foods,” said Chairman and CEO Ramon Laguarta. “The results reflect the scale and resilience of the international business, the ongoing evolution of the global portfolio and an improved presence in underpenetrated channels and occasions.”
Operating profit rose 19%, and operating margin widened 195 basis points to 16.9%. That was mainly due to a favorable net impact from acquisition and divestiture-related charges and credits, and net mark-to-market gains on commodity derivatives.
Core operating profit, which excludes certain items, rose 3% to $4,277 million. Core operating margin contracted 35 basis points to 16.9% from 17.3%.
The core result included a 4-percentage-point favorable impact from tariff refunds, the filing said. Productivity savings and effective net pricing also helped. Certain operating cost increases and higher advertising and marketing expenses offset part of the gain.
In North America, the beverages business delivered 5% net revenue growth, primarily from acquisitions made in 2025. Convenient foods net revenue trends improved sequentially, reflecting savory snacks volume growth and volume market share gains, offset by lower effective net pricing.
On a core basis, PepsiCo Foods North America fell 12% to $1,382 million in operating profit. PepsiCo Beverages North America rose 4% to $1,012 million. Europe, Middle East and Africa rose 16% to $940 million, and Latin America Foods rose 20% to $626 million.
The international businesses performed well, with each segment delivering strong net revenue growth, aided by organic volume growth within Asia Pacific Foods, International Beverages Franchise and Latin America Foods.
For the 36 weeks, net revenue rose 6.7% to $68,898 million from $64,582 million, and organic revenue rose 2.7%. Earnings per share were $6.10 vs. $4.15 a year earlier, up 47%.
That comparison includes prior-year impairment charges related to the Rockstar and Be & Cheery brands, and the company said a favorable net impact of acquisition and divestiture-related charges and credits also contributed. Core earnings per share rose 5% to $6.15.
Net cash provided by operating activities was $7,950 million for the 36 weeks, up from $5,468 million a year earlier. Capital spending was $2,182 million, down from $2,499 million.
Restructuring and impairment charges in the quarter totaled $192 million. They relate to a multi-year productivity plan publicly announced in 2019, which the company expanded and extended through the end of 2030.
The company updated its fiscal 2026 guidance. The figures below show the current outlook against the previous one.
| Measure | Current | Previous |
|---|---|---|
| Organic revenue | Approximately +3% | +2% to +4% |
| Net revenue | Approximately +6% | +4% to +6% |
| Core constant currency EPS | +1% to +2% | Low end of +4% to +6% |
| Core EPS | +2.5% to +3.5% | Low end of +5% to +7% |
| Core annual effective tax rate | Approximately 21% | Approximately 22% |
Core EPS growth is now +2.5% to +3.5%, down from the low end of +5% to +7%. Core constant currency EPS growth is now +1% to +2%, down from the low end of +4% to +6%. The company said its guidance is non-GAAP because it cannot predict certain elements of GAAP results, including foreign exchange and commodity mark-to-market impacts.
Looking ahead, Chairman and CEO Ramon Laguarta said, “we remain focused on building upon the strength of the International business while acting with urgency to sustainably improve our performance in North America through more investments in innovation, effective brand building, and sharper marketplace execution by channel.” He added, “Additional structural cost reduction actions are being identified and will be implemented in the coming months to help fund investments that aim to accelerate organic revenue growth and mitigate the impacts of rising input cost inflation.”
For fiscal 2026 the company expects cash returns to shareholders of $8.9 billion, made up of $7.9 billion in dividends and $1.0 billion in share repurchases, unchanged from the previous outlook. Capital spending is still expected below 5% of net revenue, and free cash flow conversion of at least 80%.
The filing does not break out the individual drivers of the guidance change.