PepsiCo (PEP) Stock Edges Higher After Q1 Earnings Beat Expectations

TLDR

• PepsiCo beat Q1 earnings estimates, reporting $1.61 adjusted EPS vs. $1.55 expected.
• Revenue came in at $19.44 billion, ahead of the $18.94 billion forecast.
• North American food volume grew 2% — the first increase in over two years — after price cuts on Doritos, Lay’s, and Cheetos.
• Full-year organic revenue guidance of 2%–4% growth was maintained, with EPS growth of 4%–6%.
• The company flagged a more volatile global economy due to the war in the Middle East.

PepsiCo reported first-quarter results Thursday that topped Wall Street expectations, with its long-struggling North American food business finally showing signs of life.

Adjusted earnings came in at $1.61 per share, beating the $1.55 analyst estimate. Revenue of $19.44 billion also cleared the $18.94 billion consensus.

Net income attributable to the company rose to $2.33 billion, up from $1.83 billion a year ago. On a per-share basis, that’s $1.70 versus $1.33 last year.

PepsiCo, Inc., PEP

Net sales climbed 8.5% year-over-year, helped along by the acquisition of Poppi and new distribution of Alani Nu energy drink. Strip out acquisitions, divestitures, and currency effects, and organic revenue grew 2.6%.

The stock edged up around 0.8% in premarket trading after the results.

North American Food Makes a Comeback

For the first time in more than two years, Pepsi’s North American food unit — which covers Frito-Lay and Quaker Oats — posted volume growth. Volume rose 2% in the quarter.

That’s a notable turnaround. The division had been under pressure since inflation spiked in 2022, when repeated price hikes pushed budget-conscious shoppers toward cheaper alternatives. In February, Pepsi cut prices on Lay’s, Tostitos, Doritos, and Cheetos by up to 15% in an attempt to win back those customers. Early signs suggest it’s working.

North American beverages told a different story, with volume down 2.5% in the quarter. That unit includes Pepsi, Starry, and the newly acquired Poppi.

To revive Gatorade, the company said Thursday it plans to market the drink’s hydration benefits beyond athletes, launch a lower-sugar version, and begin removing artificial colors.

Pepsi has also been leaning into consumer trends around protein and fiber. New products include Pepsi Prebiotic, Starbucks Coffee & Protein, Doritos Protein, and SunChips Fiber.

Guidance Held, But Uncertainty Flagged

PepsiCo left its full-year outlook unchanged. It still expects organic revenue to grow between 2% and 4%, with core constant currency EPS rising 4% to 6%.

But the company was careful to flag a more difficult backdrop. Executives cited ongoing geopolitical conflicts — particularly the war in the Middle East — as a source of growing economic uncertainty.

On input costs, management said its commodity hedging programs should provide some near-term protection on certain materials. Rising energy and packaging costs tied to supply chain disruptions remain a watch item.

PEP stock has gained about 9% over the past 12 months — well behind the S&P 500’s 29% return over the same period.

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