Strong earnings and confident management support PepsiCo’s share price growth

In Q2 2025, PepsiCo exceeded market expectations on revenue and earnings per share, while reaffirmation of its annual forecast and capital return program strengthened investor confidence.

On 17 July, PepsiCo, Inc. (NYSE: PEP) reported Q2 2025 revenue of 22.73 billion USD and adjusted earnings per share (core EPS) of 2.12 USD, beating analyst expectations. Organic revenue growth was 2%, driven mainly by price increases, while volumes declined across several segments, particularly in North America. International markets delivered strong results, with growth seen in EMEA and steady momentum in Latin America and the global beverages business. GAAP earnings per share fell to 0.92 USD due to asset write-downs of 1.86 billion USD on the Rockstar and Be & Cheery brands. Although free cash flow weakened in the first half of the year, the company reaffirmed its annual forecast and dividend plan.

On the first day following the report, the shares rose 7.5%, and in August, PEP’s share price continued to climb. Investor optimism was fuelled by results that surpassed market expectations for both revenue and earnings per share. Despite declining sales volumes in North America, the company delivered solid growth in international markets, particularly in EMEA and Latin America, confirming the resilience of its global business model and easing concerns over local challenges. An additional factor supporting confidence was the reaffirmation of the annual forecast and capital return plans, including a stable dividend policy. At the same time, PepsiCo continues to generate a robust free cash flow (FCF), ensuring funding for dividends and share buybacks without increasing debt.

In this article, we examine PepsiCo Inc.’s business model, revenue drivers, and quarterly results, and conduct a PEP fundamental analysis. Expert PepsiCo stock forecasts for 2025 are presented, together with an examination of PepsiCo stock performance, which underpins the outlook for PepsiCo Inc.’s shares in 2025.

About PepsiCo, Inc.

PepsiCo, Inc. is an American multinational corporation that produces and sells food, soft drinks, and snacks. Its portfolio includes well-known brands such as Cheetos, Gatorade, Lay’s, Mountain Dew, Pepsi, Quaker, and Tropicana. The company was founded in 1965 by merging Thе Pepsi-Сola Company and Frito-Lay. On 13 November 1972, PepsiCo, Inc. went public on the NYSE, and its shares have since traded under the PEP ticker symbol.

PepsiCo, Inc.’s main revenue streams

PepsiCo divides its operations into three major segments and publishes information on each separately in its quarterly reports. Below are the segments in which the company operates:

• Frito-Lay: this segment focuses on producing and selling a variety of snacks. The range includes products from well-known brands, such as Cheetos, Doritos, Lay’s, Ruffles, and Tostitos. These high-margin products support PepsiCo’s leading position in the US salty snack market
• Quaker Foods: this includes Quaker products, one of the pioneering brands in PepsiCo’s portfolio, which specialises in healthy eating. Quaker offers cereal bars, cereals, muesli, oatmeal, and other products. This sector focuses on breakfast and healthy eating products
• PepsiCo Beverages: this segment represents the entire range of PepsiCo’s drinks, including soft drinks (Mountain Dew, Pepsi), sports and energy drinks (Gatorade), purified drinking water (Aquafina), tea, and juices (Lipton, Tropicana). Drinks are the company’s core business and generate the majority of revenue

In its reports, PepsiCo provides detailed information for each segment only in North America, while revenues from other regions are presented as a consolidated total. PepsiCo’s business model demonstrates that it operates across three markets simultaneously, enabling it to diversify its revenues.

PepsiCo, Inc. Q3 2024 report

On 8 October, PepsiCo reported its financial results for Q3 2024. Below are the key figures from the report:

• Revenue: 23.32 billion USD (-0.6%)
• Net income: 2.93 billion USD (-5.0%)
• Earnings per Share: 2.13 USD (-4.9%)
• Operating profit: 3.87 billion USD (-3.6%)

Revenue by segment:

• Frito-Lay North America: 5.89 billion USD (-1.2%)
• PepsiCo Beverages North America: 7.17 billion USD (+0.1%)
• Quaker Foods North America: 648.00 million USD (-13.2%)

Revenue by region:

• Latin America: 2.91 billion USD (-4.6%)
• Europe: 3.94 billion USD (+6.4%)
• Africa, Middle East, and East Asia: 1.55 billion USD (-6.2%)
• Asia-Pacific: 1.19 billion USD (-1.4%)

PepsiCo’s management noted that the company demonstrates resilience despite challenging conditions. The crucial issues in Q3 were the recall of Quaker products over potential Salmonella contamination and geopolitical tensions in some international markets.

CEO Ramon Laguarta emphasised that the company has remained profitable thanks to strict cost control and continued investment in its competitiveness. However, in light of these challenges, PepsiCo has revised its Q4 and full-year 2024 revenue outlook. Revenue growth is now expected to fall below the previous projection of 4%, while the forecast for EPS growth remains at a minimum of 8%. Nonetheless, PepsiCo retains a positive outlook for the full year 2024.

Although its financial performance declined year-on-year, its stock price rose following the earnings release.

PepsiCo, Inc. Q4 2024 report

On 3 February 2025, PepsiCo released its Q4 2024 report. Its key financial highlights are outlined below:

• Revenue: 27.78 billion USD (-0.2%)
• Net income: 1.52 billion USD (+15.4%)
• Earnings per share: 1.11 USD (+18.1%)
• Operating profit: 2.25 billion USD (+33.7%)

Revenue by segment:

• Frito-Lay North America: 7.31 billion USD (-2.1%)
• PepsiCo Beverages North America: 7.91 billion USD (-2.1%)
• Quaker Foods North America: 874.00 million USD (-0.1%)

Revenue by region:

• Latin America: 3.69 billion USD (-6.9%)
• Europe: 4.47 billion USD (+6.2%)
• Africa, Middle East, and East Asia: 2.03 billion USD (+4.9%)
• Asia-Pacific: 1.48 billion USD (+2.1%)

In its commentary on the report, PepsiCo’s management highlighted the company’s current challenges and outlined its future plans. One of the key factors affecting financial performance was a shift in consumer preferences, particularly in North America. Declining demand for salty snacks and beverages impacted revenue in these segments. However, management emphasised that the company is actively adapting its products to evolving trends, including the growing interest in healthier food. In this context, they underscored PepsiCo’s success in launching products such as Pepsi Zero Sugar and SunChips, which cater to changing consumer preferences.

The 2025 forecast included a low single-digit growth in organic revenue and a mid-single-digit increase in adjusted EPS. Despite current challenges, this reflects moderate optimism about the company’s continued expansion. The company also announced a 5% dividend increase and a share buyback program, with a total budget of approximately 8.6 billion USD.

Additionally, PepsiCo reaffirmed its commitment to innovation, product diversification, and marketing initiatives aimed at sustaining future growth. Management expressed confidence that these measures would support improved performance in North America over the course of the year.

PepsiCo, Inc. Q1 2025 report

PepsiCo published its Q1 2025 report on 24 April 2025. Below are the key figures from the report:

• Revenue: 17.92 billion USD (-1.8%)
• Net income: 1.84 billion USD (-10%)
• Earnings per share: 1.33 USD (-10%)
• Operating profit: 2.58 billion USD (-5%)

Revenue by segment:

• International Beverages Franchise: 0.76 billion USD (+3%)
• PepsiCo Beverages North America: 5.87 billion USD (unchanged)
• PepsiCo Foods North America: 6.21 billion USD (-1%)

Revenue by region:

• Europe, Middle East and Africa: 2.39 billion USD (-2%)
• Latin America Foods: 1.67 billion USD (-12%)
• Asia-Pacific Foods: 1.02 billion USD (-2%)

PepsiCo’s Q1 2025 report demonstrated how the company is navigating challenges amid global trade disputes, shifting consumer preferences, and a volatile market environment. Revenue declined by 1.8% year-on-year, with EPS at 1.33 USD, slightly below analysts’ expectations.

Tariffs notably impacted results, particularly a 10% tariff on soda concentrate imports from Ireland and a 25% duty on aluminium imports. These measures increased production costs, compressing margins and prompting the company to revise its 2025 guidance.

In response to these challenges, PepsiCo launched strategic initiatives aimed at adapting to current market conditions. The company placed emphasis on products with higher added value, smaller packaging formats, and healthier attributes. In this context, the acquisition of the Poppi prebiotic soda brand for nearly 2 billion USD stands out, demonstrating PepsiCo’s commitment to expanding its healthy drinks portfolio.

For Q2 2025, PepsiCo’s management anticipated low single-digit organic revenue growth and a mid-single-digit increase in EPS in constant currency. Gradual improvement was expected in North America, supported by the implementation of ongoing commercial strategies, while the international segment remained a key driver of growth, with pronounced margin expansion.

Investors reacted negatively to PepsiCo’s Q1 2025 report, with declining sales in North America, particularly in the Quaker Foods division, and the downward revision of the full-year profit forecast as the main factors fuelling investor concerns. As a result, PepsiCo stock fell by 5% after the report’s release and continued to decline, extending a downward trend that began after its May 2023 peak. Analysts have also revised their estimates downwards.

PepsiCo, Inc. Q2 2025 report

On 17 July 2025, PepsiCo released its Q2 2025 report for the period ending 14 June. The key financial metrics are as follows:

• Organic revenue: 22.97 billion USD (+2%)
• Net income: 1.26 billion USD (-59%)
• Earnings per share: 0.92 USD (-58%)
• Operating profit: 1.79 billion USD (-56%)

Organic revenue by segment:

• International Beverages Franchise: 1.39 billion USD (+5%)
• PepsiCo Beverages North America: 6.87 billion USD (+1%)
• PepsiCo Foods North America: 6.32 billion USD (-2%)

Organic revenue by region:

• Europe, Middle East and Africa: 4.47 billion USD (+7%)
• Latin America Foods: 2.92 billion USD (+6%)
• Asia Pacific Foods: 1.00 billion USD (unchanged)

For Q2 2025, PepsiCo reported results above market expectations. Organic revenue grew by 2% year-on-year, while GAAP EPS fell to 0.92 USD due to a one-off impairment of intangible assets amounting to 1.86 billion USD related to the Rockstar and Be & Cheery brands. In terms of growth structure, prices continue to contribute the most, while overall volumes remain weak.

In North America, improvements anticipated earlier did not materialise, with Foods showing a 2% year-on-year organic decline due to weak volumes. Beverages in North America increased by 1%, with gradual volume improvement and growth in Pepsi and Pepsi Zero Sugar market share. Outside the US, performance was stronger. International beverages under the franchise model rose 5%, while the entire international beverage business grew by 9%, supported by robust demand in Mexico, Brazil, Germany, Poland, France, Egypt, Turkey, Saudi Arabia, Pakistan, and Thailand.

The company reaffirmed its 2025 forecast, expecting low single-digit organic revenue growth and roughly flat core EPS in constant currency. Due to a reduction in currency impact, the negative FX effect on the year is lowered to -1.5 p.p. from the previously expected -3 p.p., which improves the USD core EPS outlook. Capital return plans remain unchanged – 8.6 billion USD for the year, including 7.6 billion USD in dividends and 1.0 billion USD through share buybacks. Management is focusing on restoring North America by emphasising value propositions, streamlining the product range, and implementing the One North America initiative, while potential additional supply chain costs and tariff risks are expected to be offset through productivity improvements and yield management.

Analysis of key growth drivers and risks for PepsiCo, Inc.

Key risks identified from the review of PepsiCo’s Q2 2025 report:

• Margin and GAAP earnings pressure from large intangible asset write-downs: in Q2, the amortisation of the Rockstar and Be & Cheery brands, totalling 1.86 billion USD, reduced operating profit and GAAP EPS for the quarter. This development signals weaknesses in certain M&A assets and potential risk for further portfolio optimisation
• Price increases amid weak volumes in North America: organic growth for PepsiCo Beverages North America (PBNA) was around 1% with volumes down 4 percentage points, while PepsiCo Foods North America (PFNA) fell 2% with a 1.5 p.p. decline in volumes; this reflects heightened demand elasticity and the need to rely more on promotions and bundled offerings, limiting pricing power. Management explicitly notes that North American consumers are becoming more price-conscious, and demand remains weak
• Additional supply chain costs due to trade barriers and tariffs: management expects incremental costs in H2 2025 and is preparing hedging measures; however, this factor will continue to pressure margins
• Risk in executing the North American restructuring program: to improve efficiency, the company is closing manufacturing sites and mixing centres, reducing headcount, and reallocating channels. This approach should enhance the cost structure but entails short-term expenses and operational risks during implementation.

The Q2 report also highlights key growth drivers capable of improving the company’s financial performance or offsetting the risks outlined above:

• International business as a growth engine: in Q2, the International segment delivered 5% organic growth, while the franchised beverage business rose 9%, with management expecting to maintain momentum through strong positions in key categories and improved bottler operations. These initiatives diversify the portfolio and support PepsiCo’s overall profitability
• Recovery of Pepsi and Zero Sugar brands: Zero Sugar showed double-digit volume and revenue growth, while classic Pepsi also increased. Expansion of flavours and the Food Deserves Pepsi campaign strengthen the carbonated drinks category and shift sales towards higher-margin options, boosting average revenue per unit
• Expansion in functional beverages and energy drinks: Propel is growing at double-digit rates, while the joint venture with Starbucks and investment in Celsius increases presence in the energy drinks category, and the acquisition of Poppi strengthens positioning among younger consumers and in health-focused beverages
• Relaunch of healthier snacks and reformulated PFNA products: Lay’s and Tostitos have transitioned to recipes without artificial colours and flavours, while Sun Chips, Simply, Siete, and other portion-controlled products are expanded. This makes the range more attractive and supports sales
• Away-from-Home channel and new partnerships: expanding distribution, for example, in Subway in North America, increases reach and turnover, improves order predictability, and reduces the need for aggressive discounts

Conclusion from the analysis: PepsiCo enters H2 2025 with two clear priorities – in North America: to restore volumes and margins through value propositions, reformulated products without artificial additives, and strict cost control; outside North America: to maintain organic growth in beverages and snack categories.

In the short term, margins are pressured by tariffs, logistics, and high price sensitivity in North America. In the medium term, these factors are partially offset by international growth, expansion of Zero Sugar and functional beverages, the healthier snacks range, and efficiency programs. If the initiatives in PFNA and PBNA achieve sustainable volume growth under stable pricing, margins in H2 could improve even with moderate revenue growth.

Fundamental analysis of PepsiCo, Inc.

Below is a fundamental analysis of PepsiCo, Inc. based on Q2 2025 results:

• Liquidity and access to financing: as of Q2 2025, PepsiCo holds 7.63 billion USD in cash and cash equivalents. Two unused credit facilities of 5.0 billion USD each are available (a five-year facility until May 2030 and a 364-day facility until May 2026). Commercial paper outstanding totals 7.7 billion USD
• Debt and leverage: short-term debt amounts to 12.06 billion USD, long-term debt is 39.33 billion USD, totalling 51.38 billion USD. After accounting for 7.63 billion USD in cash, net debt is approximately 43.75 billion USD. Around 22% of debt carries a floating rate. In Q2, net interest expense and other items totalled 260 million USD, a level comfortably manageable given the current operating profit
• Cash flow and dividend coverage: free cash flow (FCF) for the trailing twelve months (TTM) is approximately 7.06 billion USD. In H1, FCF was negative (-0.34 billion USD) due to investments and M&A, including completed acquisitions of Poppi (1.9 billion USD) and Siete (1.2 billion USD). For 2025, management plans to return 8.6 billion USD to shareholders (dividends 7.6 billion USD and share buyback 1.0 billion USD). Dividends are almost entirely covered by FCF

Conclusion from the fundamental analysis of PepsiCo, Inc.: the company is considered financially resilient due to its strong brand, international operations, access to financing, and moderate leverage. Short-term risk comes from weak volumes in North America (PFNA) and one-off write-downs/investments, which resulted in a decline in H1 FCF; however, interest expenses are comfortably covered.

PepsiCo’s shares are valued near the sector median: EV/EBITDA multiples are around the middle of their historical range, and forward P/E is at a typical level for large consumer companies. Base expected returns are around 7–8% per annum from dividends and generated free cash flow (excluding growth). PepsiCo shares are suitable for a quality-at-a-reasonable-price strategy, and the current market price appears justified. A key upside/risk factor is the trajectory of volumes in North America.

Expert forecasts for PepsiCo, Inc. stock for 2025

• Barchart: 6 of 21 analysts rated PepsiCo shares as Strong Buy, 14 as Hold, and 1 as Strong Sell. The upper end of the forecast is projected at 169 USD, the lower end at 115 USD.
• MarketBeat: 4 of 19 analysts assigned a Buy rating, 14 Hold, and 1 Sell. The upper end of the forecast is projected at 178 USD, the lower end at 139 USD.
• TipRanks: 3 of 12 surveyed gave the shares a Buy rating, and 9 Hold. The upper end of the forecast is projected at 175 USD, the lower end at 140 USD.
• Stock Analysis: 3 of 14 experts rated the shares Strong Buy, 1 Buy, and 10 Hold. The upper end of the forecast is projected at 178 USD, the lower end at 139 USD.

PepsiCo, Inc. stock price forecast for 2025

On the weekly chart, PepsiCo shares bounced off a support level in May and began a steady upward trajectory. From May to August, PEP shares gained around 22% without significant corrections. If, after testing resistance near 155 USD, the price retraces to the 140 USD level, a Head and Shoulders pattern may form on the chart, which, if realised, would signal a resumption of upward movement. Based on the current performance of PepsiCo shares, the possible price movements for 2025 are as follows:

The base case forecast for PepsiCo stock anticipates a decline to support at 140 USD, followed by a rebound and a rise towards 155 USD. This scenario would complete the formation of the Head and Shoulders pattern and lead to a breakout of the Neckline. A Neckline breakout would catalyse further price growth, with the next resistance at 175 USD.

The alternative forecast for PepsiCo shares assumes further price growth with a breakout above the 155 USD resistance. Realisation of this scenario would indicate continued strong buying momentum and heightened investor optimism. In this case, the next upside target for PEP shares would be resistance at 175 USD.

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