PepsiCo (PEP) Q3 2026: EPS and Revenue Beat, But Steep Guidance Cut Overshadows the Print

$PEPWhat Happened

PepsiCo’s net revenue for the 12 weeks ended September 5 came in at $25.27 billion, up 5.6% year-over-year and roughly $300 million above the $24.97 billion analysts expected. Organic revenue growth of 3.1% also beat the 2.5% consensus. Core (non-GAAP) EPS of $2.34 topped the $2.30 Street estimate by four cents, up 2% from $2.29 a year earlier; GAAP diluted EPS of $2.23 rose a steeper 17% on favorable one-time items. Core operating profit of $4.28 billion rose 3%, though the company flagged that tariff refunds contributed a full 4 percentage points of that growth, meaning underlying profit growth was softer than the headline suggests.

The segment picture was uneven. PepsiCo Foods North America — the Lay’s and Doritos business — posted flat revenue and a 12% drop in core operating profit, which the company tied to the up-to-15% price cuts on select snack brands it rolled out in February to win back budget-conscious shoppers. International was the bright spot: core constant-currency operating profit rose between 9% and 19% across PepsiCo’s four overseas segments, and beverages grew 5%, helped by 2025 acquisitions. CEO Ramon Laguarta said the company is “acting with urgency to sustainably improve our performance in North America,” adding that “additional structural cost reduction actions are being identified and will be implemented in the coming months.”

The bigger story for investors was guidance. PepsiCo now expects FY2026 core constant-currency EPS growth of just 1% to 2%, down from the low end of its prior 4% to 6% range, and core EPS growth (including currency) of 2.5% to 3.5%, down from the low end of 5% to 7%. That implies full-year EPS of roughly $8.34 to $8.42, versus a prior Street consensus near $8.55. Organic revenue growth guidance was narrowed to approximately 3% and net revenue growth to approximately 6% — both near the higher end of prior ranges — while the core effective tax rate guide eased slightly to about 21% from about 22%. Capital spending (below 5% of net revenue), free cash flow conversion (at least 80%), and the $8.9 billion shareholder-return plan were all left unchanged.

Why Shares Rose on a Guidance Cut

PEP shares rose more than 1% in premarket trading Thursday, a notably calm reaction given the magnitude of the profit-guidance reduction and a sign that much of the North America weakness was already priced in. The stock had been trading near a 12-month low around $124 heading into the print, at roughly 14.3x next-12-month earnings — its cheapest multiple in five years and about a third below its own 5-year average near 21x. Options markets had priced in a roughly 3.75% move around the report, so the premarket move landed well inside that implied range. With the guidance reset now official, some analysts framed Thursday’s print as a line-clearing event: a lower, more achievable bar for the rest of 2026 rather than a fresh deterioration in the business.

Analyst Reaction

Argus trimmed its target to $186 from $212 immediately following the Q3 results while keeping its Buy rating, arguing the reset guidance gives PepsiCo a realistic path to clear expectations into 2027. RBC Capital’s note, issued ahead of the print, had already lowered its target to $150 from $161 while keeping a Sector Perform rating on “soft” September-quarter expectations for North America; Barclays similarly cut its target to $133 from $142 on turnaround-momentum concerns, keeping an Equal-Weight rating. Jefferies reiterated a Hold and its $152 target the same morning the results came out. The spread between the most cautious ($133) and most bullish ($186) targets underscores how divided Wall Street remains on how quickly PepsiCo’s North America snacks business can stabilize.

Why It Matters

PepsiCo’s Q3 print is a classic good-quarter, bad-outlook split: the company is executing better than feared in the quarter it just reported, but management’s own math says the next twelve months will be tougher than it told investors three months ago. That’s the second guidance cut of 2026, and it comes as rivals navigate the same value-conscious U.S. consumer. For the pre-earnings setup and consensus estimates this quarter beat, see our PepsiCo (PEP) earnings preview. For how other large-cap names have handled this earnings season’s mix of beats and guidance resets, see our Nike (NKE) Q1 FY2027 recap and Micron (MU) Q4 FY2026 recap. Browse the full lineup of coverage on our Stock Fact Sheets hub.