Core Insights - PepsiCo exceeded Wall Street expectations for third-quarter revenue and profit, driven by steady demand for its energy drinks, healthier sodas, and snack brands in key international markets [1] Financial Performance - The company reported better-than-expected revenue and profit figures for the third quarter, indicating strong performance in its product categories [1] Market Demand - Demand for energy drinks, healthier sodas, and snacks remained robust in important international markets, contributing to the company's positive financial results [1]

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh. ...

Core Insights - PepsiCo has appointed Steve Schmitt as Executive Vice President and Chief Financial Officer, effective November 10, 2025, succeeding Jamie Caulfield, who will retire after over 30 years with the company [1][4]. Group 1: Leadership Transition - Jamie Caulfield will remain in his role as CFO until November 10, 2025, after which he will take on an advisory role until May 15, 2026, to assist with the transition [1]. - Steve Schmitt joins PepsiCo from Walmart, where he served as Executive Vice President and CFO for Walmart U.S., overseeing a multi-billion-dollar omni-channel organization [2][3]. Group 2: Steve Schmitt's Background - Schmitt has been with Walmart since 2016, holding various leadership positions and playing a key role in Walmart's transformation into an omnichannel retailer [3]. - His previous experience includes roles at Yum! Brands, where he developed expertise in quick-service restaurants and evaluated long-term growth strategies [3]. Group 3: Strategic Vision - Ramon Laguarta, Chairman and CEO of PepsiCo, emphasized Schmitt's strong track record and critical expertise that align with PepsiCo's growth strategy, particularly in adapting to the dynamic retail landscape and optimizing cost structures [4]. - PepsiCo aims to be the global leader in beverages and convenient foods, guided by its pep+ strategy, which focuses on sustainability and human capital [6].

Core Insights - The article discusses the increasing appeal of dividend-paying stocks amid rising inflation, prolonged higher interest rates, and market volatility, particularly for risk-averse investors [2][4] Dividend Stock Trends - Global assets under management in dividend-focused ETFs reached nearly $600 billion as of December 31, 2024, more than double the amount recorded in December 2020, indicating a significant rise in dividend investing popularity [3] Methodology for Stock Selection - The article outlines a methodology that involves scanning stocks with consistent dividend records and sustained shareholder payouts, further refining the selection to those with a projected upside potential of over 10% based on analyst price targets as of October 8 [6] Company Profiles Verizon Communications Inc. (NYSE:VZ) - Verizon has a modest revenue growth expectation of about 3% for this year and next, despite adding 278,000 new fixed wireless access subscribers in Q2 2025, bringing the total to over 5.1 million [9][10] - The company generated nearly $9 billion in free cash flow in the first half of 2025, with projections for FY25 free cash flow between $19.5 billion and $20.5 billion, supporting its dividend payments of nearly $12 billion annually and a dividend yield of 6.68% [10][11] PepsiCo, Inc. (NASDAQ:PEP) - PepsiCo has a diversified portfolio contributing about 55% of its revenue, with international operations accounting for roughly 40% of total sales and operating profits in 2024 [13] - The company has raised its dividend for 53 consecutive years, currently offering a quarterly payout of $1.4225 per share, yielding about 4.10% as of October 8 [15] The Sherwin-Williams Company (NYSE:SHW) - Sherwin-Williams has maintained a conservative payout ratio of about 26.6% over the past decade, supported by strong free cash flow [17] - The company has rewarded shareholders with steady dividend increases for 46 consecutive years, paying a quarterly dividend of $0.79 per share, translating to a yield of roughly 0.94% as of October 8 [18]

[Executive Summary & Financial Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Financial%20Highlights) PepsiCo reported Q3 2025 GAAP net revenue growth of 2.6% and diluted EPS of $1.90, with organic revenue at 1.3% and core constant currency EPS declining by 2%, alongside strategic priorities for growth and cost optimization [Third-Quarter 2025 Reported (GAAP) Results](index=1&type=section&id=Third-Quarter%202025%20Reported%20(GAAP)%20Results) PepsiCo reported a 2.6% net revenue performance for Q3 2025, with a foreign exchange impact of 0.5%. Diluted EPS for the quarter was $1.90, representing an 11% decrease year-over-year, with a 1% positive foreign exchange impact | Metric | Third-Quarter | Year-to-Date | | :--- | :--- | :--- | | Net revenue performance | 2.6% | 0.8% | | Foreign exchange impact on net revenue | 0.5% | (1)% | | Earnings per share (EPS) | $1.90 | $4.15 | | EPS change | (11)% | (29)% | | Foreign exchange impact on EPS | 1% | (2)% | [Third-Quarter 2025 Organic/Core (non-GAAP) Results](index=1&type=section&id=Third-Quarter%202025%20Organic%2FCore%20(non-GAAP)%20Results) For Q3 2025, PepsiCo achieved 1.3% organic revenue performance. Core EPS stood at $2.29, with core constant currency EPS declining by 2% compared to the prior year | Metric | Third-Quarter | Year-to-Date | | :--- | :--- | :--- | | Organic revenue performance | 1.3% | 1.5% | | Core EPS | $2.29 | $5.88 | | Core constant currency EPS change | (2)% | (3.5)% | [CEO Commentary & Strategic Priorities](index=1&type=section&id=CEO%20Commentary%20%26%20Strategic%20Priorities) Chairman and CEO Ramon Laguarta highlighted accelerated reported net revenue growth, driven by international business resilience, improved momentum in North America Beverages, and portfolio reshaping. Key priorities for the future include accelerating growth and aggressively optimizing the cost structure through innovation, sharpening price pack architecture, and right-sizing the cost base - Reported net revenue growth accelerated, reflecting resilience in international business, improved momentum in North America Beverages, and benefits from portfolio reshaping actions[5](index=5&type=chunk) - Top priorities are to accelerate growth and aggressively optimize the cost structure[6](index=6&type=chunk) - Strategies include introducing a strong pipeline of innovation, continuously sharpening price pack architecture, and right-sizing the entire cost base[6](index=6&type=chunk) [Segment Performance Summary](index=2&type=section&id=Segment%20Performance%20Summary) PepsiCo's Q3 and year-to-date 2025 segment performance shows varied revenue and operating profit changes across North America, EMEA, Latin America, and Asia Pacific regions [Third-Quarter 2025 Segment Performance](index=2&type=section&id=Third-Quarter%202025%20Segment%20Performance) In Q3 2025, PepsiCo's total reported net revenue increased by 3%, with organic revenue growth of 1%. EMEA showed strong organic revenue growth at 5.5%, while PFNA experienced a 3% organic revenue decline. Operating profit saw a GAAP reported decline of 8% overall, but core constant currency operating profit declined by 1.5% Q3 2025 Revenue Performance by Segment | Segment | GAAP Reported % Change | Foreign Exchange Translation | Acquisitions and Divestitures | Organic % Change | Convenient Foods Volume % Change | Beverages Volume % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | PepsiCo Foods North America (PFNA) | — | — | (2.5) | (3) | (4) | | | PepsiCo Beverages North America (PBNA) | 2 | — | — | 2 | | (3) | | International Beverages Franchise (IB Franchise) | — | (1) | — | (1) | | (1) | | Europe, Middle East and Africa (EMEA) | 9 | (4) | — | 5.5 | (1) | 1.5 | | Latin America Foods (LatAm Foods) | 2 | 2 | — | 4 | — | | | Asia Pacific Foods | 2 | — | (1) | 1 | 3 | | | **Total** | **3** | **(0.5)** | **(1)** | **1** | **(1)** | **(1)** | Q3 2025 Operating Profit and EPS by Segment | Segment | GAAP Reported % Change | Items Affecting Comparability | Foreign Exchange Translation | Core Constant Currency % Change | | :--- | :--- | :--- | :--- | :--- | | PFNA | (5) | 2 | — | (3.5) | | PBNA | (20) | 13 | — | (7) | | IB Franchise | (5) | 13 | (1) | 7 | | EMEA | 1 | 6 | (4) | 3 | | LatAm Foods | (12) | 18 | 2 | 9 | | Asia Pacific Foods | 16 | 3 | (1) | 18 | | Corporate unallocated expenses | (3.5) | 19 | — | 16 | | **Total** | **(8)** | **7** | **(1)** | **(1.5)** | | **EPS** | **(11)** | **10** | **(1)** | **(2)** | [Year-to-Date 2025 Segment Performance](index=3&type=section&id=Year-to-Date%202025%20Segment%20Performance) Year-to-date 2025, PepsiCo's total reported net revenue increased by 1%, with organic revenue growth of 1.5%. LatAm Foods showed significant foreign exchange impact on revenue (10%) and strong core constant currency operating profit growth (8%). Overall GAAP reported operating profit declined by 25%, while core constant currency operating profit declined by 2% YTD 2025 Revenue Performance by Segment | Segment | GAAP Reported % Change | Foreign Exchange Translation | Acquisitions and Divestitures | Organic % Change | Convenient Foods Volume % Change | Beverages Volume % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | PFNA | — | — | (2) | (2) | (2) | | | PBNA | 1 | — | — | 1 | | (3) | | IB Franchise | 2 | 1 | — | 3 | | 1 | | EMEA | 6 | — | — | 6 | (5) | — | | LatAm Foods | (5) | 10 | — | 4 | 1 | | | Asia Pacific Foods | — | 1 | (1) | — | 4 | | | **Total** | **1** | **1** | **(0.5)** | **1.5** | **(2)** | **—** | YTD 2025 Operating Profit and EPS by Segment | Segment | GAAP Reported % Change | Items Affecting Comparability | Foreign Exchange Translation | Core Constant Currency % Change | | :--- | :--- | :--- | :--- | :--- | | PFNA | (7) | (1) | — | (8) | | PBNA | (77) | 77 | — | — | | IB Franchise | 2 | 5 | 2 | 9 | | EMEA | (13) | 20 | (1) | 5.5 | | LatAm Foods | (9) | 6 | 12 | 8 | | Asia Pacific Foods | (21) | 21 | — | — | | Corporate unallocated expenses | 9 | 5 | — | 14 | | **Total** | **(25)** | **22** | **2** | **(2)** | | **EPS** | **(29)** | **24** | **2** | **(3.5)** | [Financial Guidance and Outlook](index=4&type=section&id=Financial%20Guidance%20and%20Outlook) PepsiCo reaffirms its 2025 guidance for low-single-digit organic revenue growth and stable core constant currency EPS, with an updated foreign exchange impact and details on the investor webcast [Full-Year 2025 Guidance](index=4&type=section&id=Full-Year%202025%20Guidance) PepsiCo reaffirms its 2025 guidance, expecting low-single-digit organic revenue growth and core constant currency EPS to be approximately even with the prior year. The company anticipates a core annual effective tax rate of approximately 20% and plans total cash returns to shareholders of approximately $8.6 billion, comprising $7.6 billion in dividends and $1.0 billion in share repurchases - Company continues to expect a **low-single-digit increase** in organic revenue for 2025[18](index=18&type=chunk) - Core constant currency EPS is expected to be approximately **even with the prior year**[18](index=18&type=chunk) - Anticipates a core annual effective tax rate of approximately **20%**[18](index=18&type=chunk) - Total cash returns to shareholders of approximately **$8.6 billion**, including **$7.6 billion in dividends** and **$1.0 billion in share repurchases**[18](index=18&type=chunk) [Foreign Exchange Impact Update](index=4&type=section&id=Foreign%20Exchange%20Impact%20Update) The company has updated its expectation for foreign exchange translation headwind, now anticipating approximately 0.5 percentage points negative impact on reported net revenue and core EPS growth, an improvement from the previously expected 1.5-percentage-point headwind. This implies a 0.5% decline in core EPS for 2025, an improvement from the prior 1.5% decline - Foreign exchange translation headwind is now expected to be approximately **0.5 percentage points**, negatively impacting reported net revenue and core EPS growth (previously 1.5 percentage points)[15](index=15&type=chunk) - This updated assumption implies a **0.5% decline in core EPS in 2025** (previously 1.5% decline) compared to 2024 core EPS of $8.16[16](index=16&type=chunk) [Investor Webcast Information](index=4&type=section&id=Investor%20Webcast%20Information) PepsiCo will post prepared management remarks for its Q3 2025 results and 2025 outlook on October 9, 2025, at 6:30 a.m. (Eastern time) on its investor relations website. A live question and answer session with investors and financial analysts will follow at 8:15 a.m. (Eastern time) on the same day - Prepared management remarks for Q3 2025 results and 2025 outlook will be posted at 6:30 a.m. (Eastern time) on October 9, 2025, at https://www.pepsico.com/investors[17](index=17&type=chunk) - A live question and answer session will be hosted at 8:15 a.m. (Eastern time) on October 9, 2025, accessible via the company's investor website[17](index=17&type=chunk) [Condensed Consolidated Financial Statements](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements) PepsiCo's condensed consolidated statements of income, cash flows, and balance sheet for Q3 and year-to-date 2025 detail key financial positions and performance [Condensed Consolidated Statement of Income](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Income) For the 12 weeks ended September 6, 2025, PepsiCo reported net revenue of $23,937 million, a gross profit of $12,824 million, and net income attributable to PepsiCo of $2,603 million, resulting in diluted EPS of $1.90. For the 36 weeks ended September 6, 2025, net revenue was $64,582 million, gross profit $35,239 million, and diluted EPS $4.15 Condensed Consolidated Statement of Income (Selected Data) | Metric | 12 Weeks Ended 9/6/2025 (in millions) | 12 Weeks Ended 9/7/2024 (in millions) | 36 Weeks Ended 9/6/2025 (in millions) | 36 Weeks Ended 9/7/2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | $23,937 | $23,319 | $64,582 | $64,070 | | Cost of sales | $11,113 | $10,396 | $29,343 | $28,563 | | Gross profit | $12,824 | $12,923 | $35,239 | $35,507 | | Operating Profit | $3,569 | $3,872 | $7,941 | $10,637 | | Net Income Attributable to PepsiCo | $2,603 | $2,930 | $5,700 | $8,055 | | Diluted Net income attributable to PepsiCo per common share | $1.90 | $2.13 | $4.15 | $5.84 | - For the 12 and 36 weeks ended September 6, 2025, charges were recognized primarily related to the impairment of the **Rockstar brand**[20](index=20&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the 36 weeks ended September 6, 2025, net cash provided by operating activities was $5,468 million, a decrease from $6,220 million in the prior year. Net cash used for investing activities significantly increased to $5,237 million, primarily due to higher acquisitions. Net cash used for financing activities decreased to $1,008 million, largely due to increased proceeds from long-term debt issuances Condensed Consolidated Statement of Cash Flows (Selected Data) | Activity | 36 Weeks Ended 9/6/2025 (in millions) | 36 Weeks Ended 9/7/2024 (in millions) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $5,468 | $6,220 | | Net Cash Used for Investing Activities | $(5,237) | $(2,965) | | Net Cash Used for Financing Activities | $(1,008) | $(5,282) | | Net Decrease in Cash and Cash Equivalents and Restricted Cash | $(382) | $(2,418) | | Cash and Cash Equivalents and Restricted Cash, End of Period | $8,171 | $7,343 | - Acquisitions, net of cash acquired, investments in noncontrolled affiliates and purchases of intangible and other assets significantly increased to **$3,176 million in 2025** from $31 million in 2024[23](index=23&type=chunk) - Proceeds from issuances of long-term debt more than doubled to **$8,179 million in 2025** from $4,014 million in 2024[25](index=25&type=chunk) [Condensed Consolidated Balance Sheet](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) As of September 6, 2025, PepsiCo's total assets increased to $106,558 million from $99,467 million at December 28, 2024. This increase was driven by higher accounts and notes receivable, inventories, and goodwill. Total liabilities also increased to $87,015 million, primarily due to a rise in long-term debt obligations. Total equity grew to $19,543 million Condensed Consolidated Balance Sheet (Selected Data) | Metric | 9/6/2025 (in millions) | 12/28/2024 (in millions) | | :--- | :--- | :--- | | Total Current Assets | $28,722 | $25,826 | | Property, Plant and Equipment, net | $29,053 | $28,008 | | Goodwill | $18,845 | $17,534 | | Total Assets | $106,558 | $99,467 | | Total Current Liabilities | $31,499 | $31,536 | | Long-Term Debt Obligations | $44,113 | $37,224 | | Total Liabilities | $87,015 | $81,296 | | Total Equity | $19,543 | $18,171 | - Accounts and notes receivable, net, increased to **$12,634 million** from $10,333 million[28](index=28&type=chunk) - Inventories increased to **$6,093 million** from $5,306 million[28](index=28&type=chunk) [Non-GAAP Measures & Glossary](index=9&type=section&id=Non-GAAP%20Measures%20%26%20Glossary) This section explains PepsiCo's use of non-GAAP financial measures for internal decision-making and provides a comprehensive glossary of related terms [Explanation of Non-GAAP Measures](index=9&type=section&id=Explanation%20of%20Non-GAAP%20Measures) PepsiCo uses non-GAAP financial measures like organic revenue performance, core results, and core constant currency results internally for operational and strategic decisions, including annual operating plans and compensation. These measures provide additional information for comparing historical operating results and understanding underlying performance trends, adjusting for items not indicative of ongoing performance such as mark-to-market gains/losses, restructuring charges, and acquisition/divestiture impacts - Non-GAAP measures are used internally for operating and strategic decisions, annual operating plan preparation, business performance evaluation, and compensation determination[29](index=29&type=chunk) - These measures facilitate comparison of historical operating results and trends, providing transparency on how the business is evaluated[29](index=29&type=chunk) - Adjustments are made for items like mark-to-market gains/losses, restructuring charges, acquisition/divestiture charges, asset impairment, product recall impacts, and pension/retiree medical-related amounts[30](index=30&type=chunk) [Glossary of Non-GAAP Terms](index=9&type=section&id=Glossary%20of%20Non-GAAP%20Terms) The glossary defines key non-GAAP terms used by PepsiCo, including 'Acquisitions and divestitures' for structural changes, 'Bottler case sales (BCS)' and 'Concentrate shipments and equivalents (CSE)' for beverage volume, 'Constant currency' for results assuming stable foreign exchange rates, and 'Core' results which exclude specific items affecting comparability. It also details various excluded items such as mark-to-market net impact, restructuring and impairment charges, acquisition and divestiture-related charges, impairment and other charges (e.g., Rockstar brand), indirect and income tax impact, product recall-related impact, and pension and retiree medical-related impact. 'Organic revenue performance' is defined as revenue adjusted for foreign exchange, acquisitions, divestitures, and calendar week impacts - Acquisitions and divestitures: Mergers, acquisitions, divestitures, and structural changes[32](index=32&type=chunk) - Constant currency: Financial results assuming constant foreign currency exchange rates based on prior-year period rates[34](index=34&type=chunk) - Core: Non-GAAP financial measures excluding items affecting comparability, such as mark-to-market net impact, restructuring and impairment charges, acquisition and divestiture-related charges, impairment and other charges (e.g., Rockstar brand), indirect and income tax impact, product recall-related impact, and pension and retiree medical-related impact[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) - Organic revenue performance: Revenue adjusted for foreign exchange translation, acquisitions and divestitures, and the impact of an additional week of results (every five or six years)[44](index=44&type=chunk) [Reconciliation of GAAP and Non-GAAP Information](index=11&type=section&id=Reconciliation%20of%20GAAP%20and%20Non-GAAP%20Information) This section provides detailed reconciliations of PepsiCo's GAAP reported results to non-GAAP measures for organic revenue, operating profit, and diluted EPS across various periods [Organic Revenue Performance Reconciliation (Q3 & YTD)](index=11&type=section&id=Organic%20Revenue%20Performance%20Reconciliation%20(Q3%20%26%20YTD)) The reconciliation details the adjustments from GAAP reported net revenue to non-GAAP organic revenue performance for both the 12 and 36 weeks ended September 6, 2025. For Q3 2025, total reported net revenue growth was 3%, which adjusted to 1% organic revenue growth after accounting for foreign exchange translation and acquisitions/divestitures. Year-to-date, reported net revenue growth was 1%, leading to 1.5% organic revenue growth Organic Revenue Performance Reconciliation (12 Weeks Ended 9/6/2025) | Segment | Reported Net Revenue % Change, GAAP | Impact of foreign exchange translation | Impact of acquisitions and divestitures | Organic Revenue % Change, non-GAAP | | :--- | :--- | :--- | :--- | :--- | | PFNA | — | — | (2.5) | (3) | | PBNA | 2 | — | — | 2 | | IB Franchise | — | (1) | — | (1) | | EMEA | 9 | (4) | — | 5.5 | | LatAm Foods | 2 | 2 | — | 4 | | Asia Pacific Foods | 2 | — | (1) | 1 | | **Total** | **3** | **(0.5)** | **(1)** | **1** | Organic Revenue Performance Reconciliation (36 Weeks Ended 9/6/2025) | Segment | Reported Net Revenue % Change, GAAP | Impact of foreign exchange translation | Impact of acquisitions and divestitures | Organic Revenue % Change, non-GAAP | | :--- | :--- | :--- | :--- | :--- | | PFNA | — | — | (2) | (2) | | PBNA | 1 | — | — | 1 | | IB Franchise | 2 | 1 | — | 3 | | EMEA | 6 | — | — | 6 | | LatAm Foods | (5) | 10 | — | 4 | | Asia Pacific Foods | — | 1 | (1) | — | | **Total** | **1** | **1** | **(0.5)** | **1.5** | [Certain Line Items by Segment Reconciliation (Q3 2025)](index=12&type=section&id=Certain%20Line%20Items%20by%20Segment%20Reconciliation%20(Q3%202025)) For the 12 weeks ended September 6, 2025, the reconciliation shows adjustments from GAAP to Core for various line items by segment. Total GAAP reported operating profit was $3,569 million (14.9% margin), which adjusted to $4,137 million (17.3% margin) on a non-GAAP Core basis, after adding back items affecting comparability such as restructuring and impairment charges ($142 million) and acquisition and divestiture-related charges ($221 million) Q3 2025 Operating Profit Reconciliation (Selected Data) | Metric | Reported Operating Profit, GAAP (in millions) | Items Affecting Comparability (in millions) | Core Operating Profit, non-GAAP (in millions) | Core Operating Profit Margin, non-GAAP | | :--- | :--- | :--- | :--- | :--- | | PFNA | $1,536 | $34 | $1,570 | 17.3% | | PBNA | $729 | $246 | $975 | | | IB Franchise | $436 | $75 | $511 | | | EMEA | $720 | $88 | $808 | | | LatAm Foods | $424 | $99 | $523 | | | Asia Pacific Foods | $151 | $5 | $156 | | | Corporate unallocated expenses | $(427) | $21 | $(406) | | | **Total** | **$3,569** | **$568** | **$4,137** | **17.3%** | - Items affecting comparability for Q3 2025 operating profit included **$142 million in restructuring and impairment charges**, **$221 million in acquisition and divestiture-related charges**, and **$100 million in impairment and other charges**[52](index=52&type=chunk) [Certain Line Items by Segment Reconciliation (Q3 2024)](index=13&type=section&id=Certain%20Line%20Items%20by%20Segment%20Reconciliation%20(Q3%202024)) For the 12 weeks ended September 7, 2024, GAAP reported operating profit was $3,872 million (16.6% margin). After adjusting for items affecting comparability, the non-GAAP Core operating profit was $4,176 million (17.9% margin). Key adjustments included $238 million for restructuring and impairment charges and $52 million for mark-to-market net impact Q3 2024 Operating Profit Reconciliation (Selected Data) | Metric | Reported Operating Profit, GAAP (in millions) | Items Affecting Comparability (in millions) | Core Operating Profit, non-GAAP (in millions) | Core Operating Profit Margin, non-GAAP | | :--- | :--- | :--- | :--- | :--- | | PFNA | $1,620 | $7 | $1,627 | 17.9% | | PBNA | $914 | $133 | $1,047 | | | IB Franchise | $458 | $15 | $473 | | | EMEA | $713 | $45 | $758 | | | LatAm Foods | $480 | $11 | $491 | | | Asia Pacific Foods | $129 | $2 | $131 | | | Corporate unallocated expenses | $(442) | $91 | $(351) | | | **Total** | **$3,872** | **$304** | **$4,176** | **17.9%** | - Items affecting comparability for Q3 2024 operating profit included **$238 million in restructuring and impairment charges** and **$52 million in mark-to-market net impact**[56](index=56&type=chunk) [Certain Line Items by Segment Reconciliation (YTD 2025)](index=14&type=section&id=Certain%20Line%20Items%20by%20Segment%20Reconciliation%20(YTD%202025)) For the 36 weeks ended September 6, 2025, GAAP reported operating profit was $7,941 million (12.3% margin). After adjustments, non-GAAP Core operating profit was $10,837 million (16.8% margin). Significant adjustments included $1,960 million for impairment and other charges, $554 million for restructuring and impairment charges, and $308 million for acquisition and divestiture-related charges YTD 2025 Operating Profit Reconciliation (Selected Data) | Metric | Reported Operating Profit, GAAP (in millions) | Items Affecting Comparability (in millions) | Core Operating Profit, non-GAAP (in millions) | Core Operating Profit Margin, non-GAAP | | :--- | :--- | :--- | :--- | :--- | | PFNA | $4,463 | $170 | $4,633 | 16.8% | | PBNA | $550 | $2,014 | $2,564 | | | IB Franchise | $1,248 | $73 | $1,328 | | | EMEA | $1,310 | $388 | $1,698 | | | LatAm Foods | $1,301 | $118 | $1,419 | | | Asia Pacific Foods | $321 | $89 | $410 | | | Corporate unallocated expenses | $(1,252) | $37 | $(1,215) | | | **Total** | **$7,941** | **$2,896** | **$10,837** | **16.8%** | - Items affecting comparability for YTD 2025 operating profit included **$1,960 million in impairment and other charges**, **$554 million in restructuring and impairment charges**, and **$308 million in acquisition and divestiture-related charges**[60](index=60&type=chunk) [Certain Line Items by Segment Reconciliation (YTD 2024)](index=15&type=section&id=Certain%20Line%20Items%20by%20Segment%20Reconciliation%20(YTD%202024)) For the 36 weeks ended September 7, 2024, GAAP reported operating profit was $10,637 million (16.6% margin). After adjustments, non-GAAP Core operating profit was $11,236 million (17.5% margin). Key adjustments included $393 million for restructuring and impairment charges and $181 million for product recall-related impact YTD 2024 Operating Profit Reconciliation (Selected Data) | Metric | Reported Operating Profit, GAAP (in millions) | Items Affecting Comparability (in millions) | Core Operating Profit, non-GAAP (in millions) | Core Operating Profit Margin, non-GAAP | | :--- | :--- | :--- | :--- | :--- | | PFNA | $4,802 | $228 | $5,030 | 17.5% | | PBNA | $2,411 | $150 | $2,561 | | | IB Franchise | $1,221 | $15 | $1,236 | | | EMEA | $1,509 | $85 | $1,594 | | | LatAm Foods | $1,436 | $32 | $1,468 | | | Asia Pacific Foods | $407 | $6 | $413 | | | Corporate unallocated expenses | $(1,149) | $83 | $(1,066) | | | **Total** | **$10,637** | **$599** | **$11,236** | **17.5%** | - Items affecting comparability for YTD 2024 operating profit included **$393 million in restructuring and impairment charges** and **$181 million in product recall-related impact**[64](index=64&type=chunk) [Certain Line Items Reconciliation (Q3 2025 & Q3 2024)](index=16&type=section&id=Certain%20Line%20Items%20Reconciliation%20(Q3%202025%20%26%20Q3%202024)) For Q3 2025, GAAP diluted EPS was $1.90, which adjusted to $2.29 on a non-GAAP Core basis. For Q3 2024, GAAP diluted EPS was $2.13, adjusting to $2.31 Core. The reconciliation highlights the impact of various items affecting comparability on net income and EPS, such as acquisition and divestiture-related charges and indirect and income tax impact Q3 Diluted EPS Reconciliation | Metric | 12 Weeks Ended 9/6/2025 (GAAP) | Items Affecting Comparability (9/6/2025) | 12 Weeks Ended 9/6/2025 (Core) | 12 Weeks Ended 9/7/2024 (GAAP) | Items Affecting Comparability (9/7/2024) | 12 Weeks Ended 9/7/2024 (Core) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net income attributable to PepsiCo per common share - diluted | $1.90 | $0.39 | $2.29 | $2.13 | $0.18 | $2.31 | | Effective tax rate | 21.4% | -2.0% | 19.4% | 20.3% | 0.0% | 20.3% | - For Q3 2025, items affecting comparability increased diluted EPS by **$0.39**, including **$0.12 from acquisition and divestiture-related charges** and **$0.09 from indirect and income tax impact**[68](index=68&type=chunk) - For Q3 2024, items affecting comparability increased diluted EPS by **$0.18**, primarily from **$0.14 in restructuring and impairment charges**[68](index=68&type=chunk) [Certain Line Items Reconciliation (YTD 2025 & YTD 2024)](index=17&type=section&id=Certain%20Line%20Items%20Reconciliation%20(YTD%202025%20%26%20YTD%202024)) For YTD 2025, GAAP diluted EPS was $4.15, which adjusted to $5.88 on a non-GAAP Core basis. For YTD 2024, GAAP diluted EPS was $5.84, adjusting to $6.20 Core. The reconciliation highlights significant adjustments for impairment and other charges, which added $1.12 to YTD 2025 Core EPS YTD Diluted EPS Reconciliation | Metric | 36 Weeks Ended 9/6/2025 (GAAP) | Items Affecting Comparability (9/6/2025) | 36 Weeks Ended 9/6/2025 (Core) | 36 Weeks Ended 9/7/2024 (GAAP) | Items Affecting Comparability (9/7/2024) | 36 Weeks Ended 9/7/2024 (Core) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net income attributable to PepsiCo per common share - diluted | $4.15 | $1.73 | $5.88 | $5.84 | $0.36 | $6.20 | | Effective tax rate | 20.8% | -0.6% | 20.2% | 20.2% | 0.1% | 20.3% | - For YTD 2025, items affecting comparability increased diluted EPS by **$1.73**, with impairment and other charges contributing **$1.12**[72](index=72&type=chunk) - For YTD 2024, items affecting comparability increased diluted EPS by **$0.36**, with restructuring and impairment charges contributing **$0.24** and product recall-related impact contributing **$0.10**[72](index=72&type=chunk) [Fiscal 2024 Diluted EPS Reconciliation](index=18&type=section&id=Fiscal%202024%20Diluted%20EPS%20Reconciliation) For the fiscal year 2024, PepsiCo's reported diluted EPS (GAAP) was $6.95. After adjusting for various items affecting comparability, the non-GAAP Core diluted EPS was $8.16. Significant adjustments included $0.41 for restructuring and impairment charges and $0.38 for impairment and other charges Fiscal 2024 Diluted EPS Reconciliation | Metric | Year Ended 12/28/2024 | | :--- | :--- | | Reported diluted EPS, GAAP measure | $6.95 | | Mark-to-market net impact | (0.01) | | Restructuring and impairment charges | 0.41 | | Acquisition and divestiture-related charges | 0.01 | | Impairment and other charges | 0.38 | | Indirect and income tax impact | 0.16 | | Product recall-related impact | 0.10 | | Pension and retiree medical-related impact | 0.16 | | **Core diluted EPS, non-GAAP measure** | **$8.16** | [Cautionary Statement](index=19&type=section&id=Cautionary%20Statement) This section outlines cautionary statements regarding PepsiCo's forward-looking statements and identifies key risks that could materially affect future results [Forward-Looking Statements and Risk Factors](index=19&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This section contains cautionary statements regarding forward-looking statements, including 2025 guidance, which are based on current information and projections. These statements inherently involve risks and uncertainties that could cause actual results to differ materially. Key risks include future demand, brand image damage, competition, workforce management, water scarcity, retail landscape changes, supply chain disruptions, geopolitical conditions, economic changes, cyber incidents, and regulatory compliance. Investors are advised not to place undue reliance on these statements and to refer to SEC filings for additional risk factors - Forward-looking statements are based on currently available information, operating plans, and projections, and inherently involve risks and uncertainties[79](index=79&type=chunk) - Risks include future demand for products, damage to reputation, product recalls, competition, workforce management, water scarcity, changes in retail landscape, supply chain disruptions, political/social/geopolitical conditions, economic conditions, cyber incidents, and regulatory compliance[79](index=79&type=chunk) - Investors are cautioned not to place undue reliance on forward-looking statements and should refer to PepsiCo's SEC filings (Form 10-K, 10-Q, 8-K) for additional risk factors[80](index=80&type=chunk)

Core Insights - PepsiCo is set to announce its Q3 earnings results on October 9th, before market opening [1] - Wall Street anticipates an EPS of $2.26 for the company [1] - Revenue is projected to increase by 2% to $23.84 billion [1] Financial Expectations - Expected EPS: $2.26 [1] - Expected revenue: $23.84 billion, reflecting a 2% increase [1]

Core Viewpoint - PepsiCo is set to release its third-quarter financial results, aiming to address concerns from analysts and an activist investor regarding stock performance and strategic changes [1][6]. Earnings Estimates - Analysts predict PepsiCo will report third-quarter revenue of $23.83 billion, an increase from $23.32 billion in the same quarter last year [1]. - Expected earnings per share (EPS) for the third quarter is $2.26, down from $2.31 in the previous year [2]. Recent Performance - The company has surpassed revenue estimates for three consecutive quarters and has beaten overall estimates in seven of the last ten quarters [2]. - PepsiCo stock has underperformed compared to Coca-Cola year-to-date, necessitating a strong quarterly performance to regain investor confidence [3][4]. Market Pressures - Analysts highlight several pressures on PepsiCo, including criticism of processed foods, margin pressures, and weaker innovation compared to competitors [4]. - The stock has shown flat performance over the last three years, indicating a need for improved investor sentiment [4]. Analyst Ratings and Price Targets - Bank of America Securities maintains a Neutral rating with a $150 price target, viewing PepsiCo as a defensive investment [5]. - Other analysts have adjusted their price targets downward, with JPMorgan lowering from $157 to $151 and Barclays from $144 to $140 [7]. Activist Investor Influence - Elliott Investment Management has acquired a $4 billion stake in PepsiCo and is advocating for strategic changes, including potential divestitures and cost reductions [6][7]. Market Share and Competition - PepsiCo is currently losing market share in the U.S. soda sector, ranking fourth behind Coca-Cola, Dr Pepper, and Sprite [8]. - The company has entered a distribution agreement with Celsius Holdings to enhance its presence in the non-carbonated soda market [8]. International Performance - CEO Ramon Laguarta noted strong international growth, with International Beverages up 3% year-over-year and EMEA sales up 8% year-over-year [9]. - Continued focus on international expansion and improving North American performance is a priority for the company [9]. Guidance and Stock Performance - Following second-quarter results, PepsiCo raised its full-year EPS guidance, and analysts will be monitoring for potential further increases [10]. - As of the latest trading, Pepsi stock is down 1% to $139.32, with an 8.4% decline year-to-date, trailing Coca-Cola's 7% return [10].

Core Viewpoint - PepsiCo is set to report earnings, with expectations indicating a mixed but potentially stable outlook for the company amid challenges in profitability and market performance [1][4][7]. Earnings Expectations - Earnings per share (EPS) is expected to be $2.27, a slight decline from $2.31 in the same quarter last year, indicating a modest year-over-year decrease in profitability [3]. - Revenue is anticipated to be approximately $23.88 billion, reflecting slight growth year-over-year, but suggests potential margin pressures or increased costs affecting earnings [4]. Regional Performance - North American beverage revenue is projected to be around $7.24 billion, while food revenue is expected to exceed $6.5 billion [4]. - Latin America is expected to be a bright spot, with food revenue anticipated at $2.62 billion [5]. Market Performance - PepsiCo shares have declined about 8% year-to-date and 15% over the past 12 months, underperforming the broader beverage sector, which has seen a modest gain of over 1% [5][6]. - The company's performance has prompted scrutiny regarding its strategic direction and operational efficiencies [7]. Analyst Ratings - Analysts maintain a neutral outlook, with 31% holding a buy rating, 65% a hold rating, and 4% a sell rating. JP Morgan has lowered its price target to $157 from $151, indicating some upside potential [9][10].

Core Insights - PepsiCo, Inc. demonstrates resilience in a slowing global economy, reporting Q2 2025 earnings per share of $2.12 and revenues of $22.73 billion, reflecting a modest year-over-year increase [1][8] - The company's diversified business model across beverages, snacks, and nutrition products provides a buffer against inflationary pressures and slowing consumer spending [1][3] Group 1: Business Performance - PepsiCo's strong performance is attributed to its broad geographic and category diversification, particularly in international markets like Latin America, India, and parts of Europe and the Middle East [2] - The North American operations are undergoing a multiyear integration initiative aimed at improving efficiency and reducing costs, unlocking synergies between beverages and snacks divisions [2] - Investment in technology, AI-driven productivity, and data analytics is enhancing operational efficiency while maintaining innovation across key brands [2][3] Group 2: Product Strategy - The ongoing portfolio transformation towards "permissible" and functional products, including low-sugar beverages and protein-infused snacks, aligns with consumer preferences for health and sustainability [3] - Focus on high-margin away-from-home channels may help offset potential declines in retail volumes due to weakened discretionary spending [3] Group 3: Competitive Landscape - Competitors like Coca-Cola and Keurig Dr Pepper are also leveraging their diversified product portfolios and global presence to navigate economic challenges [4][5][6] - Coca-Cola's strategy includes a wide range of beverages beyond soda, which helps sustain volumes despite inflationary pressures [5] - Keurig Dr Pepper's balance between at-home coffee consumption and a broad cold beverage portfolio positions it well for potential economic downturns [6] Group 4: Financial Metrics - PepsiCo's stock has seen an approximate decline of 8.1% year-to-date, contrasting with the industry's growth of 1.3% [7] - The company trades at a forward price-to-earnings ratio of 16.66X, slightly above the industry average of 17.37X [9] - The Zacks Consensus Estimate indicates a year-over-year decline of 1.6% in 2025 earnings, with a projected growth of 5.8% in 2026 [10]

Core Viewpoint - PepsiCo (PEP) is recognized as a leading player in the Consumer Staples sector, demonstrating consistent operational success and rewarding shareholders over the years [1]. Financial Performance - PEP's latest earnings report showed sales growth of 1% year-over-year, while adjusted EPS fell by 7% [3]. - The company maintained its current year financial guidance despite challenges in North America, which positively influenced share performance post-earnings [4]. - Analysts have noted a bearish outlook for the upcoming earnings, with the Zacks Consensus EPS estimate down approximately 3% over recent months, although there has been some stability in revisions [5][9]. Market Position - PEP shares are currently trading at a historically low forward 12-month earnings multiple of 17.0X, reflecting a 28% discount compared to the S&P 500, marking one of the lowest valuations in the past five years [8][12]. - The stock has been in a long-term downtrend, decreasing by 7% over the last two years, indicating that even minor positive news could stabilize share prices [12]. Strategic Initiatives - The company has strengthened its long-term strategic partnership with Celsius, enhancing its energy drink portfolio, which is expected to provide favorable momentum moving forward [10]. Expectations and Outlook - PEP's upcoming earnings report is anticipated to provide insights into North America results and international momentum, with stable EPS revisions and positive sales revisions creating a favorable backdrop [9][11].