PepsiCo Beats Q3 Earnings and Revenue Estimates but Cuts Full-Year Profit Growth Forecast

PepsiCo reported third-quarter fiscal 2026 results that topped Wall Street expectations on both the top and bottom lines, though the company trimmed its full-year core earnings growth outlook. Core EPS came in at $2.34, beating the consensus estimate of around $2.29-$2.30, and net revenue reached $25.27 billion against estimates near $24.96 billion, a gain of roughly 5.6% year over year. GAAP net income for the quarter rose to $3.05 billion, or $2.23 per share, up from $2.6 billion, or $1.90 per share, in the same period a year ago. Core operating profit was $4.3 billion, slightly above estimates, while operating margin on a core basis came in at 16.9%, down 35 basis points year over year.

Organic revenue growth of 3.1% fell short of the 3.8% analyst estimate, but the company noted acceleration in organic volume growth across both global beverages and convenient foods. Segment performance outside North America was notably strong, with Latin America Foods up 14% year over year, Asia Pacific Foods up 10%, EMEA and the IB Franchise each up 8%, and PBNA rising 5%.

For the full fiscal year 2026, PepsiCo raised its net revenue growth outlook to about 6% and kept organic revenue growth guidance at approximately 3%, well below the prior analyst consensus of around 4.2%. However, the company cut its core EPS growth target to a range of 2.5% to 3.5%, down from a prior view of at least the low end of a 5% to 7% range. Core constant-currency EPS growth was also revised down to 1% to 2% from the low end of 4% to 6%. The company also lowered its core annual effective tax rate assumption to 21% from 22% and set capital spending below 5% of net revenue, with a free cash flow conversion ratio of at least 80%. PepsiCo said structural cost reduction actions are being identified and will be implemented in the coming months, with management emphasizing it is acting with urgency to improve performance in North America. Shares climbed following the report.