Breaking News | PepsiCo Misses EPS; North America Weakness Offsets International Gains

PepsiCo reported Q2 2026 adjusted EPS of $2.20, missing the $2.21 consensus, while revenue of $24.18 billion beat expectations with 6.4% growth. Core operating margin fell 40 basis points to 16.8%, reversing the 210-basis-point expansion in Q1.

North America struggled: PepsiCo Foods North America revenue dropped 2% on lower pricing and flat-to-negative volume, while Beverages North America grew 7% largely from 2025 acquisitions rather than organic demand. International segments performed strongly, with EMEA revenue up 18% and Asia Pacific Foods core operating profit up 35%.

Operating profit surged 125% year-over-year, but that comparison reflects prior-year impairment charges of $1.86 billion on Rockstar and Be & Cheery; excluding those one-time hits, core operating profit grew only 4%. Management reaffirmed FY2026 guidance of 2-4% organic revenue growth and 4-6% core constant-currency EPS growth.

• FY2026 guidance execution: Management held 2-4% organic revenue and 4-6% core EPS growth targets; next quarterly update will test whether North America stabilizes or deteriorates further.

• Brand restaging impact: Pepsi, Lay's, Doritos, and Gatorade refreshes are underway; volume trends in Q3 will show if pricing elasticity improves.

• Tariff and commodity costs: FX volatility and potential tariff pressures remain unquantified risks for margins.

• Capital allocation: $10B buyback authorization runs through Feb 28, 2030; pace of repurchases may signal management confidence in the recovery timeline.