PepsiCo Shares Rise After Q3 Earnings Beat Despite Reduced Full-Year Profit Outlook

PepsiCo (NASDAQ:PEP) shares gained more than 1% in pre-market trading on Thursday after the food and beverage group reported third-quarter earnings and revenue above analysts’ expectations, although it lowered its full-year profit growth forecasts amid higher operating costs and continued challenges in North America.

The company reported core earnings of $2.34 per share, exceeding Wall Street’s consensus estimate of $2.30 per share.

Net revenue increased 5.6% to $25.27 billion, ahead of analysts’ expectations of $24.97 billion, supported by growth across its international businesses and improving sales volumes.

Organic revenue growth accelerated to 3.1%, with volume increases recorded in both beverages and convenient foods.

Core operating profit rose 3% to $4.28 billion, although the core operating margin declined by 35 basis points to 16.9%.

PepsiCo said its operating performance benefited from tariff refunds, which contributed approximately four percentage points to core operating profit growth.

The positive impact was partly offset by higher operating expenses and increased investment in advertising and marketing activities.

The results indicated continued revenue growth across the business, although rising costs and pressure on margins remained challenges for profitability.

PepsiCo Cuts Full-Year Earnings Guidance

Despite exceeding quarterly earnings expectations, PepsiCo reduced its profit growth forecasts for the full financial year.

The company now expects core earnings per share growth of between 1% and 2% on a constant-currency basis, compared with its previous expectation of growth towards the lower end of a 4% to 6% range.

PepsiCo also lowered its reported core earnings per share growth outlook to between 2.5% and 3.5%, down from its earlier guidance towards the bottom of a 5% to 7% range.

The revised forecasts reflect continued cost pressures and the company’s efforts to strengthen its operations, particularly in the North American market.

However, PepsiCo maintained a more positive outlook for revenue.

The group narrowed its organic revenue growth forecast to approximately 3%, compared with its previous range of 2% to 4%. The updated projection remained above the analyst consensus estimate of 2.5%.

PepsiCo also increased its net revenue growth forecast to approximately 6%, compared with its previous guidance of 4% to 6%.

The improved revenue outlook reflects favourable contributions from foreign exchange movements and acquisitions.

The company maintained its planned shareholder returns of $8.9 billion, leaving its capital distribution commitments unchanged despite the reduced earnings outlook.

North American Business Remains Under Pressure

PepsiCo’s North American operations continued to face challenges, although some areas showed signs of improvement compared with the previous quarter.

Within the convenient foods business, revenue trends improved as sales volumes of savoury snacks increased and the company gained market share.

However, lower pricing partly offset these improvements, limiting the overall contribution to revenue growth.

The North American beverages business recorded a 5% increase in revenue, with most of the growth attributable to acquisitions completed during 2025.

The performance highlighted the importance of recent acquisitions in supporting revenue growth while the company works to improve underlying demand and profitability in its domestic market.

International operations delivered stronger results, with each of PepsiCo’s international business segments reporting solid revenue growth during the quarter.

The performance outside North America helped offset some of the challenges affecting the company’s US operations.

PepsiCo Plans Further Cost Reductions and Investment in Growth

Chairman and Chief Executive Officer Ramon Laguarta said PepsiCo was prioritising improvements in its North American business through increased investment and operational changes.

The company is “acting with urgency to sustainably improve our performance in North America”, Laguarta said, highlighting plans to strengthen innovation, brand development and execution across different sales channels.

PepsiCo intends to increase investment in product innovation and marketing while improving how its brands are positioned and distributed to consumers.

Management is also identifying additional structural cost reductions designed to finance growth initiatives and offset higher input costs.

The proposed efficiency measures are expected to be implemented over the coming months.

The company aims to use the savings to support investment in its brands and operations while addressing pressure on profitability.

PepsiCo’s stronger-than-expected quarterly results provided support for its shares, although the reduction in full-year earnings guidance highlighted the continued challenges facing its North American operations.

Investors will be monitoring the company’s progress in improving sales performance, managing costs and restoring operating margins as it implements its latest strategic initiatives.

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