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$Pepsi(PEP)$ is scheduled to report its fiscal Q3 2025 earnings before the market opens on Thursday, October 9, 2025.

Earnings Analysis and Analyst Expectations

PepsiCo is a consumer staples giant known for its diversified portfolio of both beverages (Pepsi, Gatorade, etc.) and convenient foods (Frito-Lay, Quaker). Current consensus estimates suggest a mixed-to-cautious outlook for Q3 2025:

PepsiCo (PEP) Fiscal Q2 2025 Earnings Summary

PepsiCo reported better-than-expected results for the second quarter of fiscal year 2025 (ended June 14, 2025), largely driven by strength in its international operations and effective cost management.

Key Financial Highlights:

Core EPS (Non-GAAP): $2.12, surpassing the consensus estimate of approximately $2.03. Core EPS on a constant currency basis declined 5% year-over-year.

Net Revenue: $22.73 billion, exceeding the anticipated $22.25 - $22.39 billion.

Organic Revenue Growth: +2.1%, showing a sequential acceleration from the prior quarter, driven primarily by effective net pricing (+4%) which offset a slight decline in organic volume (-1.5%).

GAAP EPS: $0.92, a significant decline from the prior year, primarily due to a substantial $1.86 billion impairment charge related to the Rockstar energy drink brand within the PepsiCo Beverages North America (PBNA) segment.

Segment Performance & Drivers:

International Strength: International segments were the clear growth drivers, with organic revenue growth of 6% overall, and strong performance in the Europe, Middle East, and Africa (EMEA) region (+7% organic revenue) and Latin America Foods (+6% organic revenue).

North America Focus: The North America segments continued to face challenges, particularly with volume pressure. PepsiCo is actively working to improve the performance and competitiveness of its North America businesses (PepsiCo Foods North America (PFNA) and PBNA) through productivity initiatives and targeted innovation (e.g., focus on value-packs, zero sugar options, and functional hydration).

Productivity and Cost-Saving: Management highlighted strategic productivity initiatives, including the closure of two plants and a focus on operational efficiencies, with a plan to deliver a significantly higher level of productivity savings in the second half of the year.

Lesson Learned from the Full-Year 2025 Guidance

The primary lesson from PepsiCo's full-year 2025 guidance is the critical importance of strategic agility and operational efficiency in navigating persistent macroeconomic and structural headwinds.

PepsiCo's guidance for the full fiscal year 2025 was:

Organic Revenue: Continued expectation for a low-single-digit increase (affirmed from prior guidance).

Core Constant Currency EPS: Expected to be approximately even with the prior year (affirmed from prior guidance).

Core EPS (USD): The company improved its Core EPS outlook to an expected decline of 1.5% (better than the previous expectation of a 3% decline), primarily due to a moderation in the expected foreign exchange translation headwind.

The Lesson Learned:

The maintenance of the organic revenue and core constant currency EPS guidance, alongside the improved USD EPS outlook due to FX moderation, teaches a clear lesson:

In a slow-growth environment characterized by price-sensitive consumers, a diversified global footprint and rigorous cost-management are essential shock absorbers.

Global Diversification Provides a Buffer: The strong performance of the international business is effectively compensating for softer volume and execution challenges in the larger, but more mature and pressured, North American market. This diversification makes the total company results more resilient.

Productivity Must Fund Growth: Management's focus on productivity (closing plants, reducing complexity) is explicitly aimed at freeing up capital to reinvest in innovation, competitiveness, and marketing. This indicates that in a constrained growth environment, efficiency is not just about defending margins, but about securing future market share and growth opportunities.

Core Performance Matters More Than GAAP Noise: The massive GAAP impairment charge (tied to Rockstar) was a significant one-time event, but the market tends to focus more on the Core EPS (which beat expectations) and organic revenue trends. The lesson here is that investors will look past non-cash, one-off charges as long as the underlying core operating model is proving resilient and on-track.

Key Themes in the Quarter:

Inflationary & Cost Pressure: Despite strong brand power allowing for price hikes in the past, the company is still navigating significant cost inflation, particularly in raw materials, supply chain, and packaging. This is expected to put pressure on gross and operating margins, contributing to the forecasted EPS decline despite higher revenue.

Volume vs. Price: A major factor to watch is the balance between volume and pricing. In recent quarters, revenue growth has been driven primarily by price increases, with volumes flattening or declining. The market will be looking for signs that volume declines are moderating or that pricing power remains robust without significantly hurting demand.

North America Performance: The North America Beverages (PBNA) and Frito-Lay North America (FLNA) segments are crucial. Recent reports have shown weakness or mixed results, particularly in Quaker Foods North America and some snacks. Updates on their strategy to revive demand and improve efficiency in North America will be critical.

International Strength: PepsiCo's international business, which contributes a significant portion of its revenue, has often been a reliable growth driver. Continued strong performance in key international markets (like Latin America and parts of Europe/Middle East) is expected to provide a crucial counterbalance to any domestic softness.

Key Metrics Investors Should Watch

Beyond the headline EPS and Revenue numbers, investors should focus on:

Organic Revenue Growth: This is the truest measure of the company's underlying sales momentum, as it excludes the impact of foreign currency fluctuations, acquisitions, and divestitures. Low-single-digit organic revenue growth is the company's current full-year guidance, so any deviation here will be highly scrutinized.

Segment Performance (Organic Volume & Revenue):

Frito-Lay North America (FLNA): Watch for both organic volume and revenue. Volume declines here would signal consumer pushback on price.

PepsiCo Beverages North America (PBNA): Key metrics are volume and the performance of newer products or health-focused offerings like Pepsi Zero Sugar.

Quaker Foods North America (QFNA): This segment has faced weakness; any signs of a turnaround or stabilization would be a positive surprise.

Gross and Operating Margins: As a bellwether for the impact of inflation and cost-cutting initiatives, the market will analyze whether gross margin compression is easing and if the company is effectively utilizing productivity programs to manage operating expenses.

Full-Year Guidance: The most important factor is often the company's updated outlook for Fiscal Year 2025 organic revenue and core EPS growth. Maintaining, raising, or lowering guidance will likely be the primary driver of the post-earnings stock move.

PepsiCo (PEP) Price Target

Based on 22 analysts from Tiger Brokers offering 12 month price targets for PepsiCo in the last 3 months. The average price target is $154.69 with a high forecast of $170.00 and a low forecast of $115.00. The average price target represents a 10.73% change from the last price of $139.70.

Short-Term Trading Opportunity Post-Earnings

Trading around earnings is an inherently high-risk, high-volatility event. Here is a brief look at the trading environment:

Implied Volatility: Options markets have historically factored in a significant move for PEP post-earnings. Recent historical stock reactions have been volatile (e.g., a +7.5% jump after the Q2 beat, and a -4.9% drop after a Q1 miss). This suggests the market expects a substantial reaction (the anticipated move is often around ±5%-6% in either direction).

PEP implied volatility (IV) is 26.6, which is in the 92% percentile rank. This means that 92% of the time the IV was lower in the last year than the current level. The current IV (26.6) is 2.4% above its 20 day moving average (26.0) indicating implied volatility is trending higher.

Price Reaction Drivers: The stock price reaction will depend most heavily on:

Guidance: Any change to the full-year guidance (EPS and organic revenue).

Segmental Surprises: An unexpected acceleration or deceleration in key segments like Frito-Lay volume or PBNA performance.

Margin Commentary: A clear sign that inflationary pressures are easing or that cost-cutting is having a stronger-than-expected effect.

Potential Short-Term Scenarios (High Risk):

Bullish Scenario (Surprise Beat or Strong Guidance): If the company beats consensus estimates for EPS/Revenue, and more importantly, raises or reaffirms robust full-year guidance while showing easing margin pressure or stabilizing North America volumes, the stock could see a strong positive move.

Bearish Scenario (Miss or Weak Guidance): If the company misses consensus, reports disappointing volumes in Frito-Lay or PBNA, or lowers its full-year guidance, the stock could see a sharp sell-off, as a downgrade of a stable consumer staples stock is often heavily penalized.

Given the current cautious analyst sentiment (forecasted EPS decline) and the stock's recent underperformance year-to-date, there is a risk that even an in-line report may not be enough to satisfy the market if the forward guidance remains muted or if cost pressures are highlighted as a persistent issue.

Technical Analysis - Exponential Moving Average (EMA)

Currently PEP is experiencing a consolidation to the downside, as investors might be concerned with the effectiveness of the company's cost-cutting and efficiency strategies. The market would be also watching the performance of PEP diversified food and beverage portfolio.

So for PEP to make a recovery to the update, we might need a strong updates on its full-year guidance, and if PEP could give a EPS beat, then we might see a nice upside movement as the RSI momentum remains positive and strong.

Recommendation: Due to the high-risk nature of short-term earnings trades, investors are generally advised to wait for the report and subsequent conference call before making directional decisions. For those seeking exposure, using options strategies (such as Iron Condors for a range-bound view, or a simple long Call/Put for a directional view) is a common way to manage risk, but requires advanced knowledge.

Summary

PepsiCo's fiscal Q3 2025 earnings, expected on October 9th, are anticipated to show mixed results against the prior year.

Analysts generally forecast a slight decline in Earnings Per Share (EPS), with consensus estimates around $2.26 - $2.27, down about 1.7% from Q3 2024's $2.31. This is largely attributed to continued challenges like weak consumer spending, cost escalation, and international softness.

However, revenue is expected to increase, with forecasts around $23.87 - $23.88 billion, representing growth of approximately 2.4%. Key themes to watch include the effectiveness of the company's cost-cutting and efficiency strategies, the performance of its diversified food and beverage portfolio, and any updates on its full-year guidance. Analysts are slightly bullish on an EPS beat, given PepsiCo's strong history of surpassing consensus estimates.

Appreciate if you could share your thoughts in the comment section whether you think PepsiCo could provide a strong revenue growth and also potential EPS beat.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.