PepsiCo (PEP) — Q2 2026 Earnings Preview
Key Points and Preview Table
| Factor | Details & What to Watch |
|---|---|
| Guidance vs. Consensus | Guidance: Organic revenue +2–4%, Core constant currency EPS +4–6% for FY26. Consensus: Q2 revenue $23,984M, EPS $2.17. |
| Q1 2026 Actuals | Net revenue $19,443M (+8.5% YoY), organic revenue +2.6%, core EPS $1.61 (+9% YoY), core op margin +10 bps. |
| Q2 2025 Actuals (Comp) | Net revenue $22,726M, organic revenue +2.1%, core EPS $2.12, core op margin 15.7%. |
| Q2 2026 Consensus | Revenue $23,984M (+5.5% YoY vs. Q2 2025 actual), EPS $2.17. |
| Key Drivers | North America Foods volume recovery, innovation launches, affordability initiatives, international resilience. |
| Risks/Watch Areas | Cost inflation (esp. post-Iran conflict), competitive pricing, execution of shelf resets, consumer demand in key markets. |
| Margin Outlook | Management expects core operating margin expansion for FY26, with at least +100 bps over 3 years. |
| Intra-Quarter Commentary | Q1 call: Affirmed FY26 guidance, cited strong productivity, sequential improvement in NA Foods, robust international. |
Summary and Conclusions
- PepsiCo enters Q2 2026 earnings with positive momentum: Q1 2026 showed an acceleration in both net and organic revenue growth, with North America Foods returning to volume growth (+2%) and International continuing mid-single-digit growth.
- Guidance is for 2–4% organic revenue growth and 4–6% core constant currency EPS growth for FY26. Management expects to exit the year at the higher end of the range if North America Foods and International sustain momentum.
- Consensus for Q2 2026: Revenue $23,984M (+5.5% YoY), EPS $2.17. This implies a step-up from Q2 2025 actuals ($22,726M, EPS $2.12).
- Year-over-year comp: Q2 2025 was a relatively soft quarter for organic growth (+2.1%), so the Q2 2026 comp is not especially tough, but expectations are for a clear acceleration.
- Key factors to watch: Execution of affordability and innovation initiatives in North America Foods, sustainability of international growth, margin expansion, and ability to offset cost inflation.
- Management tone remains confident: Productivity savings are expected to fund commercial investments, and the company is playing offense on both value and innovation.
Quarterly Financials — Actuals and Consensus
Quarterly Results and Consensus ($M except per-share data)
| Quarter | Revenue (Actual) | Revenue (Consensus) | Core EPS (Actual) | Core EPS (Consensus) | Organic Revenue Growth | Core Op Margin |
|---|---|---|---|---|---|---|
| Q2 2026E | 23,984 | 2.17 | ||||
| Q1 2026 | 19,443 | 18,942 | 1.61 | 1.53 | 2.6% | 15.7% |
| Q4 2025 | 29,343 | 2.26 | 2.1% | 13.9% | ||
| Q3 2025 | 23,937 | 2.29 | 1.3% | 17.3% | ||
| Q2 2025 | 22,726 | 2.12 | 2.1% | 15.7% |
Note: Q2 2026 consensus figures are estimates; all others are reported actuals.
Full-Year Guidance and Consensus
FY26 Guidance vs. Consensus
| Metric | FY26 Guidance (Company) | FY26 Consensus (Street) |
|---|---|---|
| Organic Revenue Growth | +2% to +4% | |
| Core Constant Currency EPS | +4% to +6% | |
| Reported Revenue | $98,995M | |
| Core EPS | $8.18 | |
| Core Op Margin Expansion | At least +100 bps over 3 years | |
| Free Cash Flow Conversion | At least 80% | |
| Dividend | $5.92/share (+4% YoY) | |
| Share Repurchases | $1.0B (FY26) |
Q2 2026 — What to Watch
- Organic Revenue Growth: Expectation is for continued sequential improvement, especially in North America Foods (PFNA) and Beverages (PBNA). Q1 saw +2.6% organic growth; Q2 consensus implies further acceleration.
- Volume Trends: Q1 2026 saw PFNA volume +2%, units +4%, and 300 million new occasions. Management expects further sequential improvement as shelf resets and innovation roll out.
- Innovation and Affordability: New launches (e.g., Doritos Protein, Smartfood with fiber, Gatorade low sugar) and price pack architecture are key levers. Watch for commentary on consumer uptake and incremental distribution gains.
- International Segment: Remains a pillar of growth, with mid-single-digit organic revenue growth expected to continue. Any signs of macro or geopolitical headwinds impacting demand will be closely watched.
- Margins and Productivity: Management expects core operating margin expansion in FY26, funded by record productivity savings. Q1 2026 core op margin expanded +10 bps YoY despite increased investment.
- Cost Inflation: Management flagged potential inflationary pressures post-Iran conflict but believes hedging and productivity can offset impacts in 2026.
- Competitive Dynamics: Watch for commentary on pricing, promotional intensity, and share trends, especially in North America Foods and Beverages.
Q2 2025 — Year-Ago Actuals (for Comp)
| Metric | Q2 2025 Actual |
|---|---|
| Net Revenue | $22,726M |
| Organic Revenue Growth | +2.1% |
| Core EPS | $2.12 |
| Core Op Margin | 15.7% |
Q2 2025 was a period of modest organic growth and margin pressure, setting up a relatively easy comp for Q2 2026, especially as management expects sequential improvement and stronger execution this year.
Management Commentary — Recent Tone
- On Guidance: "We are affirming fiscal 2026 financial guidance and expected cash returns to shareholders..."
- On North America Foods: "We feel good about where we are at this point in the journey, still in the process of all the shelf resets and launching the innovation. But the early reads are quite exciting."
- On International: "International business is very solid, continues to accelerate. And in our guidance, we haven't assumed any impact [from Iran conflict] because we're not seeing any at this point."
- On Margins: "We affirmed our guidance today. We'll manage margin as a total company, but we want to give ourselves as much flexibility as possible within the segments to do what's necessary to hit our guidance overall."
- On Productivity: "Productivity is one of these never-ending battles... We still have a lot of non-executed drivers of productivity in the coming quarters and years that would help us continue to give consumers the right value and compete probably in a better way against the other food manufacturers."
Conclusion
PepsiCo is set up for a sequentially stronger Q2 2026, with easier comps, affirmed guidance, and positive intra-quarter commentary. The most important factors to watch are the pace of organic revenue and volume recovery in North America Foods, the sustainability of international growth, execution of innovation and affordability initiatives, and the company's ability to deliver on margin expansion despite inflationary pressures. Management's tone remains confident, with a focus on playing offense through productivity-funded investments and a robust innovation pipeline.
