01—Abstract
Summary
Summary of the 8-K filed October 8, 2026. Cited figures are marked; the original filing is the authoritative source.
PepsiCo's third-quarter 2026 results (12 weeks ended September 5, 2026) show top-line momentum with net revenue up 5.6% to $25.3 billiona and organic revenue growth accelerating to 3.1% from 2.7% in the year-ago period.
Volume growth was positive across both global beverages and convenient foods, and the company credited the International segments for most of the strength, while North America remains the weak spot. Beverages North America grew net revenue 5%b, largely from 2025 acquisitions, but convenient foods trends in North America improved only sequentially and remained pressured by lower effective net pricing. Reported profitability is flattered by comparisons and non-operating items.
GAAP operating profit rose 19% and EPS rose 17% to $2.23c, but this reflects favorable acquisition-related charges and mark-to-market gains, and the prior-year period included Rockstar impairment charges. On a core basis, which is the more relevant measure for underlying performance, core operating profit grew only 3%, core operating margin contracted 35 basis points to 16.9%, and core EPS rose 2% to $2.34 (core constant currency EPS +1.5%). The core figures also benefited from a 4-point tariff refund tailwind, which means underlying cost pressure is somewhat larger than the headline suggests.
Management modestly adjusted fiscal 2026 guidance. Organic revenue growth is now expected at about 3%d (up from 2%-4%), net revenue at about 6%, and core constant currency EPS growth at 1%-2%, down from the prior low-end of 4%-6%.
Core EPS guidance is 2.5%-3.5%, lower than before. Management explicitly flagged additional structural cost reductions to fund growth investments and offset rising input cost inflation, signaling that margin pressure and reinvestment will shape the near-term earnings trajectory.
02—Key points
Key Highlights
- Net revenue rose 5.6% to $25,274 million in Q3 2026; organic revenue grew 3.1%, accelerating from 2.7% a year earlier, with organic volume growth in both global beverages and convenient foods.
- Reported EPS rose 17% to $2.23, but core EPS grew only 2% to $2.34 and core constant currency EPS grew 1.5%; the GAAP gain is inflated by prior-year impairments and favorable acquisition and mark-to-market items.
- Core operating margin contracted 35 bps to 16.9% in Q3 and 25 bps to 16.5% year-to-date, reflecting higher operating costs and advertising spend partly offset by productivity savings and a 4-point tariff refund benefit.
- Fiscal 2026 core constant currency EPS guidance was lowered to +1% to +2% from the prior low-end of +4% to +6%; core EPS guidance is now +2.5% to +3.5%.
- Organic revenue guidance was raised to approximately +3% (from +2% to +4%) and net revenue guidance to approximately +6% (from +4% to +6%), with FX and acquisitions adding to reported growth.
- North America remains the key concern: convenient foods net revenue improved sequentially but was offset by lower effective net pricing, and PFNA organic revenue was flat in Q3.
- Management announced additional structural cost reduction actions to fund growth investments and offset rising input cost inflation; the 2026 cash return to shareholders is unchanged at $8.9 billion.
03—Questions
Frequently Asked Questions
Why did GAAP EPS rise 17% while core EPS rose only 2%?
GAAP results benefited from a favorable net impact of acquisition and divestiture-related charges and net mark-to-market gains on commodity derivatives, and the prior-year period included charges. Core EPS excludes these items and better reflects underlying operating performance, which grew only about 2% in the quarter.
Did PepsiCo change its full-year 2026 outlook?
Yes, mixed changes. Organic revenue (about +3%) and net revenue (about +6%) guidance was raised or maintained at the upper end, but core constant currency EPS guidance was cut to +1% to +2% from a prior low-end of +4% to +6%, and core EPS guidance is now +2.5% to +3.5%. The core effective tax rate guidance improved to about 21% from about 22%.
What is driving the weakness in North America?
Convenient foods in North America saw lower effective net pricing that offset volume gains in savory snacks, and PFNA organic revenue was flat. Beverages North America's 5% net revenue growth was largely due to 2025 acquisitions, and its organic revenue declined about 2%. Management said it is acting with urgency to improve North American performance through innovation, brand building and channel execution.
What is the outlook for margins and costs?
Management noted rising input cost inflation and said additional structural cost reductions will be implemented in the coming months to fund growth investments. Core operating margin contracted in Q3 and year-to-date, so margin pressure is likely to persist in the near term, and the 4-point tariff refund benefit in Q3 may not recur.
How is cash flow and shareholder return trending?
Year-to-date operating cash flow was $7.95 billion, up from $5.47 billion, and free cash flow (operating cash flow less net capital spending) was about $5.9 billion. Cash returns to shareholders of $8.9 billion for 2026 were reaffirmed, comprising $7.9 billion in dividends and $1.0 billion in share repurchases. Free cash flow conversion is still guided to at least 80%.
04—Continue