PepsiCo Beats Q2 Earnings & Revenue Estimates, Improves 2025 EPS View

PepsiCo, Inc. PEP has reported robust second-quarter 2025 results, wherein revenues and earnings per share (EPS) beat the Zacks Consensus Estimate. While revenues improved year over year, EPS declined. The company witnessed accelerated net revenue growth compared with the previous quarter, reflecting its ability to navigate a challenging environment.Additionally, its international momentum remained strong, whereas the North America business showed improved execution and gained competitiveness across key subcategories and channels.PEP’s second-quarter core EPS of $2.12 beat the Zacks Consensus Estimate of $2.03 and declined 7% year over year. In constant currency, core earnings fell 5% from the year-ago period. Its reported EPS of 92 cents fell 59.1% year over year in the quarter. Foreign currency impacted EPS by 2%. (See the Zacks Earnings Calendar to stay ahead of market-making news.)Shares of the Zacks Rank #3 (Hold) company have lost 5.3% in the past three months compared with the industry’s 5.6% decline. Image Source: Zacks Investment Research Peek Into PEP’s Q1 DetailsNet revenues of $22.73 million rose 1% year over year and beat the Zacks Consensus Estimate of $22.39 billion. The unit volume was down 1.5% for the convenient food business and was flat for the beverage business. Foreign currency impacted revenues by 1.5%.On an organic basis, revenues grew 2.1% year over year, reflecting a sequential improvement. The rise was driven by a 4% increase in effective net pricing, offset by a 1.5% decline in organic volume.Our model predicted year-over-year organic revenue growth of 2.3% for the second quarter, with a 4.2% gain from the price/mix and a 1.9% decline in volume.PepsiCo, Inc. Price, Consensus and EPS Surprise  PepsiCo, Inc. price-consensus-eps-surprise-chart | PepsiCo, Inc. Quote On a consolidated basis, the reported gross profit declined 1.3% year over year to $12.4 billion. The core gross profit declined 0.4% year over year to $12.5 million. The reported gross margin declined 120 bps, whereas the core gross margin fell 80 bps year over year.We anticipated the core gross margin to contract 20 bps year over year to 55.7% in the second quarter. In dollar terms, core gross profit was expected to decline 0.8% year over year.PepsiCo reported an operating income of $1.8 billion, which fell 55.8% year over year. The core operating income declined 5.1% year over year to $3.9 billion. The core constant-currency operating income declined 1% year over year. The operating margin contracted significantly to 7.9% from 18% in the year-ago quarter on a reported basis. On an adjusted basis, the core operating margin contracted 110 bps year over year to 17.2%.Our model predicted core SG&A expenses of $8.7 billion, which indicated year-over-year growth of 3.5%. As a percentage of revenues, core SG&A expenses were anticipated to be 39.1%, suggesting a 150-bps rise from the prior-year quarter.We expected a core operating margin of 16.6%, implying a 170-bps decline from the year-ago quarter’s actual.PEP’s Segmental DetailsOn a reported basis, PepsiCo witnessed revenue growth across most operating segments, except for PBNA and LatAm Foods.Revenues on a reported basis rose 1% year over year in PFNA, 8% in EMEA, 3% in IB Franchise and 0.5% in Asia Pacific Foods. However, reported revenues were flat in PBNA and declined 7% in LatAm Foods.PEP’s organic revenues improved across most operating segments, except for PFNA and Asia Pacific Foods. Organic revenues rose 1% for PBNA, 5% for IB Franchise, 7% for EMEA and 6% for the LatAm Foods segment. However, organic revenues declined 2% for the PFNA and were flat for the Asia Pacific Foods segment.Financials of PepsiCo Show StabilityPEP ended second-quarter 2025 with cash and cash equivalents of $7.6 billion, long-term debt of $39.3 billion, and shareholders’ equity (excluding non-controlling interest) of $18.4 billion.Net cash provided by operating activities was $996 million as of June 14, 2025, compared with $1.3 billion as of June 15, 2024.PEP’s Outlook for 2025Looking ahead, PepsiCo remains committed to strengthening its international momentum while accelerating improvements in North America. Key priorities include driving growth and profitability through portfolio innovation and cost optimization. As a result, the company reaffirmed its organic revenue growth guidance for 2025. Notably, its core constant-currency EPS outlook has improved, supported by moderating foreign exchange headwinds amid a weakening U.S. dollar.For 2025, PepsiCo expects low-single-digit organic revenue growth. Due to anticipated increases in supply-chain costs, driven by tariffs, heightened macroeconomic volatility and ongoing softness in consumer demand, the company expects core constant-currency EPS for 2025 to be flat with the prior year.Based on the current rates, PEP expects currency headwinds to hurt revenues and core EPS by 1.5 percentage points in 2025. The company expects a core effective tax rate of 20% for 2025.Given the above assumption, PepsiCo expects the core EPS to decline 1.5% year over year in 2025 compared with the previous expectation of a 3% decline. The company reported a core EPS of $8.16 in 2024.PEP has been committed to rewarding shareholders through dividends and share buybacks. It expects to return a value worth $8.6 billion in 2025, including $7.6 billion of dividends. Additionally, the company plans to repurchase shares worth $1 billion in 2025.Don’t Miss These Better-Ranked StocksWe have highlighted three better-ranked stocks from the Consumer Staple sector, namely The Coca-Cola Company KO, The Vita Coco Company Inc. COCO and Zevia PBC ZVIA.Coca-Cola, a soft drinks behemoth, currently has a Zacks Rank #2 (Buy). KO shares have declined 5.1% in the past three months. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for Coca-Cola’s 2025 sales and earnings suggests growth of 2.6% and 3.1%, respectively, from the year-ago period’s reported figures. KO has a trailing four-quarter average earnings surprise of 4.9%.Vita Coco is the producer and distributor of coconut water products under the Vita Coco brand name in the United States, Canada, Europe, the Middle East, Africa and the Asia Pacific. The company currently has a Zacks Rank #2. COCO shares have rallied 20.2% in the past three months.The Zacks Consensus Estimate for COCO’s 2025 sales and earnings indicates growth of 12.8% and 6.5%, respectively, from the previous year’s reported figures. Vita Coco has a trailing four-quarter average earnings surprise of 28.2%.Zevia develops, markets, and distributes zero-sugar sodas, energy drinks, and organic teas across the United States and Canada under its flagship brand. The company currently has a Zacks Rank #2. ZVIA shares have rallied 29.5% in the past three months.The Zacks Consensus Estimate for Zevia’s 2025 sales and earnings implies growth of 3.4% and 48.4%, respectively, from the previous year’s reported numbers. ZVIA has a trailing four-quarter average earnings surprise of 33.6%.Zacks' Research Chief Picks Stock Most Likely to "At Least Double"Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.See Our Top Stock to Double (Plus 4 Runners Up) >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CocaCola Company (The) (KO): Free Stock Analysis Report Vita Coco Company, Inc. (COCO): Free Stock Analysis Report PepsiCo, Inc. (PEP): Free Stock Analysis Report Zevia PBC (ZVIA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks