[Financial Highlights](index=1&type=section&id=PepsiCo%20Reports%20Second-Quarter%202025%20Results) PepsiCo's Q2 2025 results show a 1.0% net revenue increase but a significant 59% GAAP EPS decrease, with non-GAAP organic revenue up 2.1% [Q2 & YTD 2025 Key Results](index=1&type=section&id=Second-Quarter%202025%20Results) In Q2 2025, PepsiCo reported a 1.0% increase in net revenue, but a significant 59% decrease in GAAP EPS to $0.92 Q2 & YTD 2025 GAAP Results | | Second-Quarter | Year-to-Date | | :--- | :--- | :--- | | Net revenue performance | 1.0% | (0.3)% | | Foreign exchange impact on net revenue | (1.5)% | (2)% | | Earnings per share (EPS) | $0.92 | $2.25 | | EPS change | (59)% | (39)% | | Foreign exchange impact on EPS | (2)% | (3)% | Q2 & YTD 2025 Organic/Core (Non-GAAP) Results | | Second-Quarter | Year-to-Date | | :--- | :--- | :--- | | Organic revenue performance | 2.1% | 1.7% | | Core EPS | $2.12 | $3.59 | | Core constant currency EPS change | (5)% | (4.5)% | [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Ramon Laguarta highlighted accelerated net revenue growth driven by international momentum and improved North America execution, reaffirming 2025 financial targets - Management is encouraged by **accelerated net revenue growth**, with continued momentum in international business and improved execution in North America[5](index=5&type=chunk) - Future plans include **portfolio innovation** and **cost optimization** to drive growth and profitability[6](index=6&type=chunk) - The company is confident in delivering **low-single-digit organic revenue growth** for fiscal 2025, with an improved core USD EPS outlook due to moderating foreign exchange headwinds[6](index=6&type=chunk) [Segment Performance](index=2&type=section&id=Summary%20Performance) International segments demonstrated strong organic revenue growth in Q2 2025, while North America showed mixed results with significant GAAP operating profit declines due to impairment charges [Second-Quarter 2025 Segment Performance](index=2&type=section&id=Summary%20Second-Quarter%202025%20Performance) In Q2 2025, international segments showed strong organic revenue growth, while North America was mixed, with GAAP operating profit severely impacted by impairment charges Q2 2025 Revenue Performance by Segment | Segment | Reported % Change | Organic % Change | Convenient Foods Volume % Change | Beverages Volume % Change | | :--- | :--- | :--- | :--- | :--- | | PFNA | 1% | (2)% | (1)% | N/A | | PBNA | 0% | 1% | N/A | (2)% | | IB Franchise | 3% | 5% | N/A | 1% | | EMEA | 8% | 7% | (6)% | 1% | | LatAm Foods | (7)% | 6% | 4% | N/A | | Asia Pacific Foods | 0.5% | 0% | 5% | N/A | | **Total** | **1%** | **2%** | **(1.5)%** | **0%** | Q2 2025 Operating Profit Performance by Segment | Segment | GAAP Reported % Change | Core Constant Currency % Change | | :--- | :--- | :--- | | PFNA | (17)% | (13)% | | PBNA | (165)% | 0% | | IB Franchise | 7% | 9% | | EMEA | (36)% | 6% | | LatAm Foods | 0% | 16% | | Asia Pacific Foods | (90)% | (13)% | | **Total** | **(56)%** | **(3)%** | [Year-to-Date 2025 Segment Performance](index=3&type=section&id=Summary%20Year-to-Date%2025%20Performance) Year-to-date 2025 performance mirrored Q2 trends, with international segments driving organic revenue growth and major GAAP operating profit declines in PBNA and Asia Pacific Foods YTD 2025 Revenue Performance by Segment | Segment | Reported % Change | Organic % Change | Convenient Foods Volume % Change | Beverages Volume % Change | | :--- | :--- | :--- | :--- | :--- | | PFNA | 0% | (2)% | (1)% | N/A | | PBNA | 0% | 1% | N/A | (3)% | | IB Franchise | 3% | 6% | N/A | 2% | | EMEA | 5% | 7% | (7)% | (1)% | | LatAm Foods | (9)% | 5% | 2% | N/A | | Asia Pacific Foods | (1)% | 0% | 4% | N/A | | **Total** | **0%** | **2%** | **(2)%** | **0%** | YTD 2025 Operating Profit Performance by Segment | Segment | GAAP Reported % Change | Core Constant Currency % Change | | :--- | :--- | :--- | | PFNA | (8)% | (10)% | | PBNA | (112)% | 5% | | IB Franchise | 6% | 10% | | EMEA | (26)% | 8% | | LatAm Foods | (8)% | 8% | | Asia Pacific Foods | (39)% | (9)% | | **Total** | **(35)%** | **(2)%** | [2025 Financial Guidance and Outlook](index=4&type=section&id=Guidance%20and%20Outlook) PepsiCo affirmed its full-year 2025 non-GAAP guidance for low-single-digit organic revenue growth and stable core constant currency EPS, with an improved foreign exchange outlook - The company continues to expect for 2025: - A **low-single-digit increase in organic revenue** - **Core constant currency EPS** to be approximately even with the prior year - A core annual effective tax rate of approximately **20 percent** - Total cash returns to shareholders of approximately **$8.6 billion** (**$7.6 billion dividends**, **$1.0 billion share repurchases**)[18](index=18&type=chunk) - The expected negative impact from foreign exchange translation has been revised down to approximately **1.5 percentage points** on net revenue and core EPS, from a previous estimate of **3 percentage points**[15](index=15&type=chunk) - The updated guidance implies a **1.5% decline in core EPS in 2025**, an improvement from the previously forecasted **3% decline**, compared to 2024 core EPS of **$8.16**[16](index=16&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements) PepsiCo's Q2 2025 consolidated financial statements reflect a significant decline in operating profit and net income due to impairment charges, alongside increased debt and acquisitions [Condensed Consolidated Statement of Income](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Income) For the 24 weeks ended June 14, 2025, net revenue was nearly flat, but operating profit and net income saw sharp declines due to a $1.86 billion impairment charge Statement of Income Summary (24 Weeks Ended) | (in millions, except per share) | 6/14/2025 | 6/15/2024 | | :--- | :--- | :--- | | Net Revenue | $40,645 | $40,751 | | Gross Profit | $22,415 | $22,584 | | Operating Profit | $4,372 | $6,765 | | Net Income Attributable to PepsiCo | $3,097 | $5,125 | | Diluted EPS | $2.25 | $3.71 | - A significant charge of **$1.86 billion** was recognized for the impairment of the Rockstar and Be & Cheery brands, which heavily impacted operating profit[20](index=20&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the first 24 weeks of 2025, net cash from operating activities decreased, while net cash used for investing activities significantly increased due to acquisitions, offset by higher long-term debt issuance Statement of Cash Flows Summary (24 Weeks Ended, in millions) | | 6/14/2025 | 6/15/2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $996 | $1,315 | | Net Cash Used for Investing Activities | $(4,127) | $(1,454) | | Net Cash Provided by/(Used for) Financing Activities | $1,868 | $(2,900) | | Net Decrease in Cash | $(841) | $(3,343) | | Cash and Cash Equivalents, End of Period | $7,712 | $6,418 | [Condensed Consolidated Balance Sheet](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) As of June 14, 2025, PepsiCo's total assets and liabilities increased, primarily driven by growth in current assets and a significant rise in short-term debt obligations Balance Sheet Summary (in millions) | | 6/14/2025 | 12/28/2024 | | :--- | :--- | :--- | | Total Current Assets | $28,210 | $25,826 | | Total Assets | $105,345 | $99,467 | | Total Current Liabilities | $36,396 | $31,536 | | Total Liabilities | $86,786 | $81,296 | | Total Equity | $18,559 | $18,171 | [Reconciliation of GAAP and Non-GAAP Measures](index=9&type=section&id=Non-GAAP%20Measures) This section defines and reconciles non-GAAP financial measures, such as organic revenue and core results, which are used to provide a clearer view of underlying business performance [Explanation of Non-GAAP Measures and Glossary](index=9&type=section&id=Glossary) This section defines non-GAAP financial measures like 'organic revenue performance' and 'core results', used for internal decision-making and investor transparency - PepsiCo uses non-GAAP measures internally for operating and strategic decisions and believes they provide additional transparency for investors to evaluate business performance and trends[28](index=28&type=chunk) - Items excluded from GAAP results to arrive at 'Core' non-GAAP results include **mark-to-market net impacts**, **restructuring and impairment charges**, **acquisition/divestiture-related charges**, and **product recall impacts**[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) - Organic revenue is a non-GAAP measure that adjusts reported revenue for the impacts of **foreign exchange translation**, **acquisitions**, and **divestitures** to provide a clearer view of ongoing business performance[43](index=43&type=chunk) [Financial Reconciliations](index=11&type=section&id=Reconciliation%20of%20GAAP%20and%20Non-GAAP%20Information) This section provides detailed reconciliations between GAAP and non-GAAP figures, adjusting reported net revenue, operating profit, and EPS for significant items like impairment charges [Organic Revenue Performance Reconciliation](index=11&type=section&id=Organic%20Revenue%20Performance) For Q2 2025, total reported net revenue growth was 1%, adjusted to 2% organic growth after accounting for foreign exchange impacts Q2 2025 Revenue Reconciliation Summary | (in millions) | Reported Net Revenue (GAAP) | Organic Revenue (non-GAAP) | | :--- | :--- | :--- | | **Q2 2025** | $22,726 | $22,970 | | **Q2 2024** | $22,501 | $22,501 | | **% Change** | 1% | 2% | YTD 2025 Revenue Reconciliation Summary | (in millions) | Reported Net Revenue (GAAP) | Organic Revenue (non-GAAP) | | :--- | :--- | :--- | | **YTD 2025** | $40,645 | $41,433 | | **YTD 2024** | $40,751 | $40,751 | | **% Change** | 0% | 2% | [Operating Profit and EPS Reconciliation](index=12&type=section&id=Certain%20Line%20Items%20by%20Segment) For Q2 2025, reported operating profit of $1,789 million was adjusted by a $1,860 million impairment charge to arrive at a core operating profit of $3,911 million Q2 2025 Operating Profit Reconciliation (in millions) | | Amount | | :--- | :--- | | Reported Operating Profit (GAAP) | $1,789 | | Impairment and other charges | $1,860 | | Restructuring and impairment charges | $215 | | Acquisition and divestiture-related charges | $62 | | Mark-to-market net impact | $(15) | | **Core Operating Profit (non-GAAP)** | **$3,911** | Q2 2025 EPS Reconciliation | | Amount | | :--- | :--- | | Reported Diluted EPS (GAAP) | $0.92 | | Impairment and other charges | $1.05 | | Restructuring and impairment charges | $0.12 | | Acquisition and divestiture-related charges | $0.03 | | Mark-to-market net impact | $(0.01) | | **Core Diluted EPS (non-GAAP)** | **$2.12** | Fiscal 2024 EPS Reconciliation | | Amount | | :--- | :--- | | Reported diluted EPS (GAAP) | $6.95 | | Adjustments (Restructuring, Impairment, etc.) | $1.21 | | **Core diluted EPS (non-GAAP)** | **$8.16** | [Cautionary Statement](index=19&type=section&id=Cautionary%20Statement) This section serves as a legal disclaimer, advising that all forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially - Forward-looking statements are based on currently available information and are not guarantees of future performance[80](index=80&type=chunk) - Identified risks include, but are not limited to: **future demand**, **brand image**, **product quality**, **competition**, **supply chain costs**, **geopolitical conditions**, **economic changes**, **cyber incidents**, and **new taxes or regulations**[80](index=80&type=chunk) - The company undertakes no obligation to update any forward-looking statements[81](index=81&type=chunk)

Earnings Report - PepsiCo is set to release its second-quarter earnings results on July 17, with analysts expecting earnings of $2.03 per share, down from $2.28 per share in the previous year [1] - Projected quarterly revenue for PepsiCo is $22.3 billion, a slight decrease from $22.5 billion a year earlier [1] Analyst Ratings - Barclays analyst Lauren Lieberman has maintained an Equal-Weight rating on PepsiCo and lowered the price target from $135 to $132 [2] - The company currently offers an annual dividend yield of 4.31%, translating to a quarterly dividend of $1.42 per share, or $5.69 annually [2] Dividend Income Calculations - To achieve a monthly dividend income of $500, an investor would need to own approximately 1,054 shares of PepsiCo, equating to an investment of about $141,036 [3] - For a more conservative monthly income goal of $100, an investor would need 211 shares, requiring an investment of around $28,234 [3] Dividend Yield Dynamics - Dividend yield can fluctuate based on changes in stock price and dividend payments, calculated by dividing the annual dividend by the current stock price [4] - For instance, if a stock with a $2 annual dividend rises to $60, the yield drops to 3.33%, while a drop to $40 increases the yield to 5% [5] Stock Performance - PepsiCo shares fell by 1.3% to close at $133.81 on Tuesday [5]

Core Insights - PepsiCo is scheduled to announce its earnings on July 17, 2025, with consensus forecasts predicting earnings of $2.03 per share and revenues of $22.3 billion, which are lower than the previous year's earnings of $2.28 per share and sales of $22.5 billion [3][4]. Historical Performance - Over the past five years, PepsiCo's stock has shown a significant trend of positive one-day returns after earnings reports, with a 78% occurrence rate of increases and a median positive return of 1.5%, peaking at 3.6% [3][7]. - In the last three years, the percentage of positive one-day returns rises to 82%, with the median of positive returns being 1.5% and negative returns averaging -1.1% [7]. Financial Metrics - PepsiCo has a market capitalization of $186 billion, with $92 billion in revenue, $13 billion in operating income, and a net profit of $9.4 billion over the past twelve months, indicating strong operational profitability [4]. Trading Strategies - Traders may consider pre-earnings positioning based on historical probabilities and evaluate the relationship between immediate and medium-term returns to guide their trading strategies [6][8]. - A correlation analysis between one-day, five-day, and twenty-one-day returns can help identify the strongest trading opportunities following earnings announcements [8][9]. Peer Comparison - The performance of PepsiCo's competitors can influence stock reactions post-earnings, with historical data showing the relationship between PepsiCo's stock performance and that of its peers reporting earnings prior [9].

Core Viewpoint - PepsiCo is expected to report a decline in quarterly earnings and revenues, with earnings per share projected at $2.03, down 11% year-over-year, and revenues forecasted at $22.37 billion, a decrease of 0.6% compared to the previous year [1]. Earnings Estimates - The consensus EPS estimate has been revised upward by 0.1% in the last 30 days, indicating a reassessment by analysts [2]. - Changes in earnings estimates are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate revisions and short-term stock price performance [3]. Revenue Projections - Analysts project 'Net Revenue- PBNA (PepsiCo Beverages North America)' to reach $6.84 billion, reflecting a year-over-year increase of 0.5% [5]. - 'Net Revenue- PFNA (PepsiCo Foods North America)' is estimated at $6.40 billion, indicating a significant year-over-year increase of 1040.2% [5]. - 'Net Revenue- LatAm Foods' is expected to be $2.50 billion, showing a year-over-year decline of 17.8% [5]. Stock Performance - PepsiCo shares have increased by 3.2% over the past month, compared to a 5% increase in the Zacks S&P 500 composite [6]. - With a Zacks Rank of 3 (Hold), PepsiCo is anticipated to closely follow overall market performance in the near term [6].

Core Viewpoint - PepsiCo and Cargill have announced a strategic collaboration to promote regenerative agriculture practices across 240,000 acres in Iowa from 2025 to 2030, focusing on enhancing supply chain resilience and supporting farming communities [1][2][4]. Group 1: Collaboration Details - The collaboration will specifically target the corn supply chain in Iowa, where Cargill sources ingredients for PepsiCo's products [2][7]. - Practical Farmers of Iowa (PFI) will play a crucial role in providing farmers with tailored advice and support for implementing regenerative practices [3][6]. Group 2: Goals and Objectives - PepsiCo aims to drive the adoption of regenerative practices across 10 million acres globally by 2030, while Cargill has a similar goal for 10 million acres of North American farmland [4][5]. - The initiative seeks to improve soil health, increase resilience to climate impacts, and enhance long-term farm productivity [8]. Group 3: Benefits to Farmers - Participating farmers will receive agronomic guidance, incentive payments, and access to technical resources to facilitate their transition to regenerative practices [6][7]. - PFI will manage the enrollment and oversee measurement, reporting, and verification to ensure credible outcomes [6].

Core Insights - PepsiCo, Inc. is focusing on productivity mechanisms to enhance efficiency, fund innovation, and boost margin expansion [1][9] - The company faces cost challenges in 2025 due to inflation, supply-chain disruptions, and commodity price fluctuations [2][9] - PepsiCo is doubling down on productivity and transformation initiatives to address cost pressures and drive long-term margin expansion [3][4] Productivity Initiatives - PepsiCo's productivity initiatives aim to drive cost savings across the value chain, including increased automation in manufacturing, warehousing, and distribution [1][3] - The initiatives extend beyond cost containment, focusing on operational excellence, innovation, and sustainable value creation [4] - The company is utilizing data-driven insights to optimize logistics and enhance warehouse efficiency [3][4] Competitive Landscape - Key competitors in productivity enhancements include The Coca-Cola Company and Monster Beverage Corporation [5] - Coca-Cola has achieved strong productivity growth through technology, data analytics, and improved employee engagement, enhancing efficiency and customer satisfaction [6] - Monster Beverage emphasizes productivity through R&D investments and supply chain optimization, achieving a gross margin expansion of 240 basis points in Q1 2025 [7] Financial Performance - PepsiCo's shares have declined approximately 11.1% year to date, contrasting with the industry's growth of 5.3% [8] - The forward price-to-earnings ratio for PepsiCo is 16.72X, below the industry average of 17.98X [10] - The Zacks Consensus Estimate indicates a year-over-year earnings decline of 3.6% for 2025, with a projected increase of 5.3% for 2026 [11]

Group 1: Dividend Stocks Overview - The S&P 500 index currently has a low dividend yield of 1.2%, which is less attractive compared to U.S. Treasury bonds [1] - There are high-yield dividend stocks available that can enhance portfolio income [1] Group 2: British American Tobacco (BTI) - British American Tobacco has seen a 40% increase year-to-date and offers a dividend yield of around 6% [2][5] - The company's growth is attributed to new nicotine categories such as vaping and nicotine pouches, with its Velo brand holding a 30% global market share in nicotine pouches [4] - U.S. revenue from nicotine pouches is growing in triple digits, helping to offset declines in traditional cigarette sales [4] Group 3: PepsiCo (PEP) - PepsiCo's stock has experienced a 30% drawdown, resulting in a dividend yield of 4% [7] - Despite concerns over slowing volume growth and competition from weight loss drugs, PepsiCo projects organic revenue growth in 2025 due to its historical pricing power [8] - Over the past decade, PepsiCo's dividend per share has increased by 100%, and the current yield is the highest in 10 years, presenting a buying opportunity [9] Group 4: Altria Group (MO) - Altria Group has the highest dividend yield on the list at 7% [11] - The company primarily relies on cigarette sales for profits, facing challenges in expanding into new nicotine categories [12] - Altria has managed to maintain profitability through price increases and share buybacks, reducing shares outstanding by 15% over the last decade, which supports dividend growth [13][14]

Core Viewpoint - PepsiCo is expected to report a decline in both revenue and earnings for Q2 2025, with projected revenue of $22.4 billion, a year-over-year decrease of 0.5%, and earnings per share (EPS) of $2.04, down 10.5% year-over-year [1] Group 1: North American Market Challenges - The North American snack business is experiencing ongoing weakness, leading to a downgrade in earnings expectations and target price from $150 to $145 by Bank of America [2] - Sales growth in both the North American Food and Beverage segments is slowing, with the North American Food business (PFNA) facing significant margin pressure [2] - Bank of America anticipates a decline in PFNA operating margin by over 375 basis points to approximately 22.5%, below the market consensus of 23.5% [2][3] Group 2: International Business Outlook - Despite challenges in North America, Bank of America believes that international operations, particularly in Latin America, may provide a positive offset to the decline in the North American market [4] - The strong performance in international markets, aided by low base effects in countries like Mexico, could help maintain the company's overall organic sales and profit expectations for the year [4] Group 3: Earnings and Sales Projections - Analysts have revised Q2 EPS expectations down from $2.03 to $2.02, while maintaining 2026-2027 EPS estimates at $8.35 and $8.95 respectively [3] - Evercore ISI projects a lower organic sales growth rate of 0.9% for Q2, compared to the market consensus of 1.8%, with North American organic sales expected to decline by 2.0% [3] - The challenges faced by the Frito-Lay business segment have led Evercore ISI to lower its target price from $155 to $140, citing weak financial guidance and consumer pressure [3]

Group 1: Coca-Cola's Performance - Coca-Cola's organic sales increased by 6% in Q1 2025, despite challenges in the consumer staples sector due to inflation and financial concerns among consumers [1] - The company's strong performance is attributed to its iconic brands, global distribution, effective marketing, and leading research and development capabilities [2] - Coca-Cola has a market capitalization of $300 billion, positioning it as a potential industry consolidator [2] Group 2: Dividend and Valuation - Coca-Cola is recognized as a Dividend King, having increased its dividend for 63 consecutive years, indicating a robust business strategy [4] - However, the company's valuation is a concern, with price-to-sales, price-to-earnings, and price-to-book ratios all above their five-year averages, and a dividend yield of 2.9% at the lower end of its 10-year range [5] Group 3: Comparison with PepsiCo - PepsiCo's Q1 performance was less favorable, with organic sales rising only 1.2%, and the stock has declined approximately 30% since mid-2023, presenting a potential buying opportunity for long-term dividend investors [8] - PepsiCo offers a higher dividend yield of 4.3% and has lower valuation ratios compared to Coca-Cola, making it appear more attractive for investment [9] - Despite current underperformance, PepsiCo has a strong long-term history, having increased its dividend for 53 consecutive years, and offers diversification across beverages, snacks, and packaged foods [10] Group 4: Investment Strategy - The current market sentiment favors Coca-Cola due to its strong performance, but this may limit upside potential as investors pay a premium for the stock [12] - For contrarian investors, PepsiCo may represent a better long-term investment opportunity, especially during periods of market pessimism [13]

Core Viewpoint - The article discusses the recent developments in trade negotiations, the impact of tariffs on inflation, and the upcoming economic data releases that could influence monetary policy decisions in the US and Europe [1][3][6]. Trade Negotiations and Tariffs - President Trump announced a new round of reciprocal tariffs on several trade partners, leading to a decline in US stock markets, with the Dow Jones down 1.02% and the S&P 500 down 0.31% for the week [1]. - The deadline for the new tariffs to take effect is August 1, and investors are awaiting further news on trade negotiations [1][3]. - The EU is attempting to reach a trade agreement with the US, with concerns that US tariffs could disrupt transatlantic supply chains [6]. Economic Data and Monetary Policy - The upcoming US inflation data, particularly the Consumer Price Index (CPI) for June, is expected to influence the Federal Reserve's decision on potential interest rate cuts later this year [3]. - The Federal Reserve's June meeting minutes indicated concerns about inflation pressures from tariffs, but a belief that a rate cut may occur later in the year [3]. - In the UK, inflation has risen, with the CPI at 3.4% in May, and expectations for a potential rate cut by the Bank of England if economic data continues to underperform [7]. Commodity Markets - Oil prices have stabilized, with WTI crude oil rising 2.16% to $68.45 per barrel and Brent crude oil increasing 3.02% to $70.36 per barrel, amid concerns over summer supply and demand [4]. - Gold prices have also rebounded, with COMEX gold rising 0.73% to $3356 per ounce, as investors seek safe-haven assets amid trade uncertainties [5]. Upcoming Economic Indicators - Key economic indicators to watch include the US PPI, industrial production, and retail sales data, as well as consumer sentiment surveys [3][9]. - In Europe, the ZEW economic sentiment index for Germany will be released, reflecting the economic outlook amid trade tensions [6].