Key Stats
- Current price: ~$15
- Q1 2026 revenue: $19.4B, +8.5% YoY
- Q1 2026 adjusted EPS: $1.61, +8.8% YoY
- Q1 2026 organic revenue growth: +2.6%
- Q1 2026 core EPS growth: +9%
- Full-year organic revenue guidance: +2% to +4% (skewed toward high end in H2)
- TIKR model price target: ~$218
- Implied upside: ~40% over ~5 years (around 8% annualized)
PepsiCo Q1 2026 Earnings Breakdown
PepsiCo stock (PEP) delivered $19.4B in Q1 2026 revenue, up 8.5% year over year from $17.9B in the prior-year March quarter, with core EPS of $1.61, up 8.8% from $1.48.
Organic revenue grew 2.6% in the quarter, according to CFO Steve Schmitt on the Q1 2026 earnings call.
The headline story was the volume inflection at PepsiCo Foods North America (PFNA), which posted 2% volume growth and 4% unit growth, adding 300 million incremental consumption occasions versus the prior-year period, according to Chairman and CEO Ramon Laguarta on the Q1 2026 earnings call.
Laguarta credited a holistic commercial strategy: value adjustments on core multipacks, shelf resets roughly 50% complete, innovation now at 40% to 50% ACV in permissible and functional segments, and Away From Home acceleration growing at three times the company average.
PepsiCo Beverages North America (PBNA) posted 9% reported revenue growth, driven by 2% organic growth plus 7 percentage points from acquired and distributed platforms including poppi and an expanded energy portfolio, according to Laguarta on the Q1 2026 earnings call.
Excluding the ongoing case pack water transition to a third party, which laps in one month, PBNA volume was nearly flat and management expects positive volume growth in coming quarters.
International momentum continued with no demand impact observed from the Iran conflict as of the call date, with management citing supply chain redundancy and strong World Cup summer activation programs as near-term commercial drivers.
On the cost side, PFNA unit costs declined in Q1, and PepsiCo’s systemic hedging programs (6 to 12 months of coverage) provide near-term inflation visibility, though Schmitt acknowledged the full magnitude of commodity pressure from the conflict remains to be determined.
Full-year organic revenue guidance was affirmed at 2% to 4%, skewed toward the high end in the second half, with core EPS growth of 9% in Q1 tracking in line with that commitment.
PepsiCo Stock: What the Income Statement Shows
PepsiCo stock’s income statement tells a recovery story: operating margins compressed through early 2025, then inflected upward across the last three reported quarters.
Gross margin in the March 2026 quarter came in at 55.3%, up from 55.1% in the June 2025 quarter and recovering from a trough of 53.7% in the December 2025 quarter.
Operating income reached $3.3B in Q1 2026, up 16.4% year over year from $2.8B in the prior-year March quarter.
Operating margin expanded to 17.0% in Q1 2026, up from 15.8% in Q1 2025, continuing the recovery arc that began in Q3 2025.
The December 2025 quarter operating margin had compressed to 14.1%, reflecting typical seasonal patterns in the fiscal fourth quarter, but the March 2026 result confirms the underlying margin trajectory is moving in the right direction.
Laguarta noted on the Q1 2026 earnings call that total company core operating margin increased approximately 10 basis points in Q1, with a prior-year property sale gain in PFNA creating a modest headwind to the reported comparison.
Valuation Model Take
TIKR’s valuation model prices PepsiCo stock at ~$218, implying roughly 40% total return from the current ~$155 price over the next 4.7 years, or about 7.5% annualized.
The mid-case model assumes a revenue CAGR of 3.5% through 2035 and a net income margin of 12.4%, both modest targets relative to PepsiCo’s recent one-year net income margin of 12.2%.
This Q1 report strengthens the investment case at the margin: the volume inflection at PFNA, PBNA’s 9% reported revenue growth, and affirmed full-year guidance all confirm the turnaround thesis is executing on schedule.
At ~$155, PepsiCo stock is trading at a discount to a model built on conservative assumptions, which makes the current entry point more compelling than the headline underperformance of the past year would suggest.
The central tension PepsiCo stock faces now: the PFNA volume recovery is visibly underway, but Iran conflict-driven commodity inflation could compress the margin expansion path the model depends on.
What Has to Go Right
- PFNA shelf resets complete by end of Q2, driving sequential organic revenue acceleration toward the high end of the 2% to 4% full-year guidance range
- PBNA volume turns positive ex case pack water as the transition fully laps in one month, adding reported growth momentum in Q2 and beyond
- 6 to 12 month commodity hedges absorb the bulk of 2026 inflation, with productivity gains (global shared services, AI deployment, Texas supply chain integration pilot) providing the offset Schmitt outlined
- World Cup summer activation generates incremental occasions across international markets, sustaining the international acceleration with no demand deterioration from conflict conditions
What Could Still Go Wrong
- Commodity inflation from the Iran conflict proves more severe or longer-lasting than the hedging window covers, forcing price/pack architecture adjustments that slow the consumer volume recovery at PFNA
- Innovation at 40% to 50% ACV and shelf resets only 50% complete in Q1 mean H1 results reflect partial execution; any retail partner pullback on space commitments would clip the full-year guidance case
- PBNA reported revenue growth at 9% is heavily dependent on acquired/distributed platforms (poppi, energy); organic growth at 2% and near-flat volume ex case pack water leave the underlying business still in recovery
- 2027 scenario planning flagged by Schmitt with no visibility provided; if inflation does not abate, the margin expansion assumed in the TIKR mid-case model faces meaningful pressure in the outer years
Should You Invest in PepsiCo, Inc.?
The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.
Pull up PEP stock and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.
You can build a free watchlist to track PepsiCo, Inc. alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.
Access Professional Tools to Analyze PEP stock on TIKR for Free →
