PepsiCo, Inc. PEP used its second-quarterearnings callto argue that the bigger story is not the modest earnings beat, but the split between a resilient international engine and a North America business still being rebuilt around affordability, portfolio shifts and away-from-home expansion.
Management reaffirmed the company’s 2026 guidance, but the discussion made it clear that investors remain focused on whether PepsiCo can turn improving volume trends in U.S. foods and beverages into stronger returns in the back half.
PEP Keeps Full-Year Targets Intact
PepsiCo reported second-quarter core EPS of $2.20, beating the Zacks Consensus Estimate of $2.19. Revenues of $24.18 billion topped the consensus mark of $23.87 billion. Net revenues rose 6.4%, and core EPS increased 4% from a year earlier.
PepsiCo, Inc. Price, Consensus and EPS Surprise
PepsiCo, Inc. price-consensus-eps-surprise-chart | PepsiCo, Inc. Quote
Chairman and CEO Ramon Laguarta said that the company’s first half featured its fastest global volume growth since 2022, with foods volume rising 3% and beverages increasing 2%. He framed that as evidence that PepsiCo’s brand and portfolio strategy is gaining traction.
CFO Stephen Schmitt said that PepsiCo reaffirmed its 2026 outlook, including organic revenue growth of 2-4% and core constant-currency EPS growth of 4-6%, though he also stated that earnings are tracking toward the low end of that EPS range.
PepsiCo Leans on Overseas Momentum
Laguarta repeatedly shifted attention to the international business, which he said is becoming a larger and more profitable part of PepsiCo’s mix. International operations delivered strong performances across EMEA, Asia Pacific Foods and the International Beverages Franchise.
In the release, EMEA saw 10% reported revenue growth and 6% organic growth, while Asia Pacific Foods grew 12% reported and 9% organic. International Beverages Franchise revenues rose 11%, with 9% organic growth and 5% beverage volume growth.
Schmitt added that second-quarter international operating margin expanded by a full point, reinforcing management’s view that global growth is not coming at the expense of profitability.
PEP Defends Its U.S. Foods Reset
The sharpest investor scrutiny stayed on North America, especially PepsiCo Foods North America. PFNA’s second-quarter reported revenues fell 2%, and core constant-currency operating profit declined 8%, even as management highlighted improving category and share trends.
Laguarta said that affordability investments and growth in permissible and portion-control offerings helped turn the U.S. salty snacks category back to positive volume, with PepsiCo gaining volume share. He said that was a central strategic objective entering the year.
Still, he acknowledged that second-quarter volume improvement fell short of expectations. He cited a weaker consumer backdrop, driven mainly by higher gas prices, plus delays in executing some price investments and shelf-space gains with customers.
PepsiCo Sees Pressure in Impulse Channels
Analyst questions pushed hardest on convenience and gas, where PepsiCo said that traffic conversion into purchases weakened as fuel prices rose. Laguarta stated that the pattern was most visible in impulse channels and was a new pressure point in the quarter.
Management’s answer was not to retreat from value spending. Instead, Schmitt said that PepsiCo will keep “playing offense,” with higher North America advertising and marketing spending in the second half while refining customer-by-customer trade and pricing tactics.
On the beverage side, PBNA’s operating margin fell about 90 basis points. Schmitt said that about half of the gross profit rate decline came from the Alani commercial arrangement, with the rest tied to channel softness and mix.
PEP Finds Help From Tariff Refunds
Schmitt gave investors one important bridge for the second half: tariff refund claims tied to last year’s payments are expected to add about one full point of EPS growth for 2026. That benefit is set to help offset commodity inflation and support continued reinvestment.
He said that PepsiCo expects a gradual improvement in North America, stronger international performance and more productivity in the fourth quarter than the third quarter. He also flagged a higher year-over-year tax rate and the timing of certain costs as factors shaping the back-half cadence.
Laguarta added that productivity remains the funding mechanism behind the strategy, with automation, digitalization and logistics integration in the United States intended to support growth investments without starving overseas markets of capital.
PepsiCo Leaves a Measured Tone
The call’s overall tone was constructive, but not relaxed. Management sounded confident in the international platform and in the long-term logic behind affordability, portfolio transformation and away-from-home expansion in North America.
At the same time, PepsiCo spent much of the Q&A defending execution and timing in the United States, rather than declaring the turnaround complete. That left the back half positioned as a proof period for converting volume gains and strategic investments into cleaner profit momentum.
Zacks Signals for PEP Stock
PEP carries a Zacks Rank #4 (Sell), along with a Value Score of C, a Growth Score of B, a Momentum Score of D and a VGM Score of C. Within the Zacks framework, the rank carries the most weight because it reflects earnings estimate revisions, while the Style Score serves as a complementary indicator.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
That combination points to relatively better growth characteristics than value or momentum, but the Rank #4 remains the more cautious near-term signal. The Zacks Rank can change after analysts revise estimates following the just-reported results, so the stock’s standing is not fixed.
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