Can PepsiCo Regain Growth? What Its Latest Quarter Shows
Not easily. PepsiCo's third-quarter organic revenue rose 3.1%, its fastest since the fourth quarter of 2023, but North America was flat and the company cut its 2026 profit growth outlook because of margins. International markets drove the growth, while North American foods profit fell 12%. Management says the US consumer is not expected to improve over the next 12 to 18 months and that it is "not competing well in soft drinks." PEP trades at 17.3 times earnings with a 4.2% trailing dividend yield. This is analysis, not a recommendation.
How did PepsiCo do in its latest quarter?
| Measure | Q3 2026 | Note |
|---|---|---|
| Net revenue | $25.27 billion, up 5.6% | Includes 1.7 points from acquisitions, net of disposals |
| Organic revenue growth | 3.1% | Management called it the fastest since Q4 2023 |
| Core EPS | $2.34, up 2% | Core constant-currency EPS up 1.5% |
| GAAP EPS | $2.23, up 17% | Mostly lapping a prior-year impairment |
| Core operating margin | 16.9%, down 35 basis points | Tariff refunds added 4 points to core operating profit growth |
| Year to date | Organic revenue +2.7%, core EPS +5% | 36 weeks |
The quarter ended September 5, 2026, and PepsiCo reported it on October 8. Numbers are from its press release and call.
Where is the growth coming from?
| Segment | Organic revenue | Volume | Pricing | Core operating profit |
|---|---|---|---|---|
| Foods North America (Frito-Lay and Quaker) | 0% | +0.5% | -1% | Down 12% |
| Beverages North America | 0% | -3% | +3% | Up 4% |
| International Beverages Franchise | +7% | +5.5% | +2% | Up 9% |
| Europe, Middle East and Africa | +9% | +1% | +7% | Up 19% |
| Latin America Foods | +6% | +2.5% | +3% | Up 10% |
| Asia Pacific Foods | +9% | +11% | -2% | Up 12% |
PepsiCo's Q3 2026 organic revenue growth by segment from its October 8, 2026 press release. International, in green, is about 45% of year-to-date profit.
The headline 3.1% is an average of two different businesses. International is growing 6% to 9%, while the large North American segments were flat on revenue. North American foods volume turned slightly positive after falling last year, helped by lower price points, but pricing fell 1% and core profit fell 12%.
Why did PepsiCo cut its profit outlook?
| 2026 guidance | Previous | Current |
|---|---|---|
| Organic revenue growth | +2% to +4% | About +3% |
| Core constant-currency EPS | Low end of +4% to +6% | +1% to +2% |
| Core EPS | Low end of +5% to +7% | +2.5% to +3.5% |
| Free cash flow conversion | At least 80% | At least 80%, unchanged |
| Cash returned to shareholders | $8.9 billion | $8.9 billion: $7.9 billion of dividends and $1.0 billion of buybacks |
The cut is about margin, not sales. The CFO said margin performance is below where the company expected, that input costs are trending higher and that mix has been a headwind, and that hedges which protect against costs are rolling off in the fourth quarter. The tariff refund that helped Q3 does not repeat, which adds pressure to North American beverages. PepsiCo says more cost-cutting is coming and will give 2027 detail when it reports in February.
What has to go right for growth to return?
- Snack volume must hold at lower prices. Frito-Lay volume has turned positive, but cheaper price points are costing profit per bag.
- Soft drinks must stop losing share. The CEO said "we are not competing well in soft drinks," and plans more brand spending on Pepsi, Mountain Dew and Poppi.
- The consumer must recover, or costs must fall. Management said it does not expect the US consumer to be in a much better place within 12 to 18 months, so the plan leans on affordability and savings.
- Cost savings must reach profit. Structural savings are still being identified, with no dollar target in the call text that was readable.
The long-term aim is organic growth of about 4%, and management expects sequential improvement into 2027. That is a goal, not a forecast, and it follows a year in which it lowered its profit growth plan.
How does PEP look on this site's checks?
| Measure | PepsiCo (PEP) | Coca-Cola (KO) |
|---|---|---|
| Price | $138.83 | $95.34 |
| Trailing / forward P/E | 17.3 / 14.8 | 28.2 / 25.6 |
| Trailing dividend yield | 4.18% | 2.74% |
| Payout ratio | 72% | 77% |
| Debt to equity | 2.33 | 1.20 |
| Revenue growth / net margin | +6.4% / 11.1% | +6.5% / 28.6% |
| Free-cash-flow yield | 5.8% | 3.5% |
| Distance from 52-week high | -19% | At its high |
| Price change over one year | -9.6% | +33.4% |
| Value filters passed | 4 of 8 | See the Coca-Cola page |
From the weekly data of October 23, 2026, on the PepsiCo and Coca-Cola stock pages. The market is paying far more for Coca-Cola's margins and steadiness than for PepsiCo's, which is the gap management is trying to close. This site's reverse DCF says PEP's price already asks for free cash flow growth of about 8.4% a year, fading to 2.5%, which is near its baseline, so recovering growth is partly priced in.
A trailing yield near 4.2% with a payout near 72% leaves less room than it looks. How to calculate the dividend payout ratio explains the test, and how to find safe high-dividend stocks shows how to check one.
Sources
- PepsiCo Q3 2026 earnings release, Exhibit 99.1 (SEC, October 8, 2026): revenue, EPS, segments and guidance
- PepsiCo Q3 2026 earnings call transcript (Motley Fool, October 8, 2026): management comments
- PepsiCo on this site: price, ratios and filters, October 23, 2026
Part of the call transcript was available only as a summary, so quotes come from the readable portion. This is educational content, not investment advice.
PepsiCo growth FAQ
Is PepsiCo growing?
Slowly. Organic revenue rose 3.1% in the third quarter of 2026, its best since late 2023, but North America was flat and profit growth guidance was cut.
Why did PepsiCo lower its guidance?
For margin, not sales. The CFO cited input costs trending higher, an unfavourable mix and hedges rolling off, and core EPS growth is now guided to 2.5% to 3.5%.
Is PepsiCo's dividend safe?
It has paid out about 72% of earnings over the trailing year and plans $7.9 billion of dividends in 2026 against free cash flow conversion of at least 80%. Check the coverage each quarter.
How does PepsiCo compare with Coca-Cola?
PEP trades at 17.3 times earnings against Coca-Cola's 28.2, with a higher dividend yield of 4.2% against 2.7%, and has fallen 9.6% over a year while Coca-Cola rose 33%.
When does PepsiCo report next?
Management said it will give 2027 expectations in February, when it reports fourth-quarter results.