PepsiCo Cuts 2026 Core EPS Growth Forecast to 1%–2%
Key Facts
PepsiCo lowered its fiscal 2026 constant-currency core earnings-per-share growth forecast to 1%–2%, from the low end of its previous range of 4%–6%, according to its third-quarter results disclosure published on October 8. The company also lowered its core earnings-per-share growth forecast to 2.5%–3.5%, compared with the low end of its previous range of 5%–7%. The adjustment comes as the company says the recovery in growth and operating margin in North America is taking longer than planned. Reuters reported that core operating margin contracted 35 basis points year over year in the third quarter. The chief financial officer said North American margins would remain under pressure in the fourth quarter.
PepsiCo did not cut its fiscal 2026 organic revenue growth forecast, keeping it at about 3%, while raising its net revenue growth forecast to about 6% from a previous range of 4% to 6%. In the third quarter, revenue rose 5.6% to $25.274 billion, and organic revenue increased 3.1%. The company attributed net revenue growth to organic revenue growth, a net gain of 1.7 percentage points from acquisitions and divestitures, and a positive foreign-currency translation impact of 0.7 percentage points. Revenue forecasts thus remained more stable than earnings guidance, which was cut amid margin pressure. The figures show sales continuing to grow alongside a slowdown in the improvement of North American profitability.
The chief financial officer said restoring growth and margins in the North American business was taking longer than planned. In the third quarter, beverage volume in the region fell 2%, while Frito-Lay snack volume was unchanged from the same period a year earlier. Reuters reported that company officials expect consumers in the region to remain under pressure over the next twelve to eighteen months. By contrast, PepsiCo said its international business performed well, with strong net revenue growth across all sectors. The company said organic volume growth in Asia Pacific, its international beverage business and Latin American foods supported international performance.
The company also faced higher input costs, including fuel, aluminum and agricultural commodities, and announced low-single-digit price increases for some snacks and beverages, including Doritos, Ruffles, Sun Chips and some soft drinks. The chief executive said the company would focus on improving the performance of its soft-drink business. PepsiCo used a $178 million tariff refund to offset costs in the third quarter, but said the amount would not be available in coming quarters. It also said strength in the international business and productivity savings supported results, while higher costs for some operations and advertising and marketing expenses partly offset their impact on core operating profit. The company plans to identify and implement additional structural cost-cutting measures in the coming months to fund investments aimed at accelerating organic revenue growth and addressing input-cost inflation.
Reuters quoted the company as saying cost-cutting measures would accompany investments in innovation, brand building and improved execution in North America. The company had announced that its third-quarter results and materials would be published on October 8, 2026, with a question-and-answer session for analysts at 8:15 a.m. Eastern Time. In trading that morning, the stock rose about 2% despite the earnings forecast cut, Reuters reported. For the November 4 closing price of $142.42, verified data on the session high and low are not available here. The trajectory of North American margins remains central to assessing how cost savings, investments and new prices will affect the company's performance in coming periods.