Is PepsiCo's International Business Its Most Reliable Growth Engine?

Core Insights - PepsiCo Inc.'s international business is a key growth driver, generating $38 billion in revenues in 2025, accounting for over 40% of total net revenues and core segment operating profit [1][9] - The international segment achieved 4.5% organic revenue growth in 2025, with consistent performance across food and beverage categories [2][4] Financial Performance - The international segment recorded its 19th consecutive quarter of mid-single-digit organic revenue growth, alongside a 27% growth in core operating profit and a 225 basis points margin expansion in Q4 2025 [2][9] - PepsiCo's shares have increased by 15.7% year-to-date, outperforming the industry growth of 13.3% [8] Geographic Diversification - Growth is geographically diversified, with strong performance in markets such as Mexico, Brazil, Argentina, India, Germany, Egypt, and Thailand for food, and Mexico, the U.K., Spain, Poland, Pakistan, and Australia for beverages [3][4] Strategic Initiatives - Management anticipates a "long runway for profitable growth" driven by localized innovation, expanded distribution in developing markets, and increased participation in energy and functional categories [4] - The company is well-positioned for further scaling due to resilient demand, margin expansion, and sustained share gains in international markets [4] Valuation and Earnings Estimates - PepsiCo trades at a forward price-to-earnings ratio of 19.11X, compared to the industry average of 20.08X [10] - The Zacks Consensus Estimate for PepsiCo's earnings per share implies year-over-year growth of 5.4% and 6.7% for 2026 and 2027, respectively [11]