PepsiCo beats expectations, lowers guidance in effort to stabilize North America business

PepsiCo (PEP) reported third-quarter results Thursday that beat Wall Street expectations, but lowered its earnings outlook as the company struggles to regain momentum in the U.S. market.

“We continue to act with a high sense of urgency to sustainably improve the company’s financial and business performance (particularly in North America),” PepsiCo CEO Ramon Laguarta said in prepared remarks.

PepsiCo’s revenue rose 5.6% year over year to $25.27 billion, narrowly beating Street expectations of around $25 billion. Adjusted earnings per share came in at $2.34, slightly above the $2.29 per share expected, according to Bloomberg consensus data. Tariff refunds totaled $178 million in the third quarter.

For fiscal 2026, the company now expects net revenue at the high end of its range, up approximately 6%. But PepsiCo lowered its core earnings per share growth forecast to 2.5-3%, down from the low end of a range of 5-7%.

The stock rose 1% in premarket trading following the results.

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Closing: October 7 at 4:00 p.m. EDT

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The company said it has seen results from innovation in portion control, multipack offerings, protein, fiber and simpler ingredients, with strong performance from its NKD, Doritos Protein and Lays Baked with Olive Oil products. On the beverage side, low-sugar Gatorade and sugar-free Pepsi Treats have shown results.

However, the company reiterated its intention to increase prices by 15% this year to offset rising input costs. Earlier this year, Pepsi lowered prices, resulting in a 280 basis point decline in its core operating margin in North America.

PepsiCo also said it was working to reduce costs by the end of the year.

“Additional structural cost reduction actions are being identified and will be implemented in the coming months to help finance investments aimed at accelerating organic revenue growth and mitigating the impacts of increasing input cost inflation,” Laguarta said.