Core Insights - PepsiCo is facing significant external challenges, including currency volatility and rising tariff-related costs, which are impacting profit conversion as it approaches the end of 2025 [1][8] - The company aims to maintain core constant-currency EPS flat year-over-year, but achieving this will require navigating a difficult macroeconomic environment [1][8] Currency Impact - Currency translation is expected to negatively affect reported revenues and core EPS by approximately 0.5 percentage points, which, while an improvement, still poses a significant challenge [2][8] - The company's large global footprint makes it particularly susceptible to currency fluctuations, which can erode profit gains from local markets [2] Tariff Pressures - Tariff impacts and rising costs of sourcing global inputs created a three-percentage-point headwind in the most recent quarter, further pressuring margins [2][8] - These tariff-related costs limit the benefits of pricing actions and productivity savings, making it crucial for PepsiCo to manage these challenges effectively [2] Strategic Actions - To defend its EPS target, PepsiCo is implementing cost cuts, optimizing sourcing, and tightening revenue management [3] - The company is streamlining SKUs, enhancing manufacturing and distribution efficiency, and increasing automation to mitigate higher operating costs [3] Competitive Landscape - Coca-Cola and Keurig Dr Pepper are also experiencing currency and tariff pressures, but the scale and impact vary based on their geographic presence and supply chain structures [4] - Coca-Cola faces notable currency pressure due to its extensive global operations, while Keurig's exposure is more limited but still significant due to tariff-related challenges [5][6] Financial Performance - PepsiCo shares have decreased by 1.2% over the past three months, contrasting with the industry's growth of 2.6% [7] - The forward price-to-earnings ratio for PepsiCo is 17.15X, slightly below the industry average of 18.07X [9] - The Zacks Consensus Estimate indicates a year-over-year decline of 0.7% in 2025 earnings, with a projected growth of 5.9% for 2026 [10]